4 Impulsive Mistakes Newbie Day Traders Make

Posted on: 19 June 2017

New traders make mistakes; that's just natural. But by educating yourself as a trader you can sidestep many of the more emotional problems that a trader will encounter. All you need to do is remain calm, stick to your strategy, and avoid the following mistakes.

1. Switching Between Different Analysis Charts

When one analysis isn't working, it can become tempting for an inexperienced trader to switch to a different chart. The problem with this is that the stock market (and stock buying signal charts) are often based on statistics. A single type of analysis generally evens out to a winning position over time. If a trader constantly switches off when they are losing, they aren't ever going to even out. For more information about stock buying signal charts, contact a business like TBSP Inc.

2. Running Too Many Trades at Once

It can be easy to keep opening trades, especially when many of the trades are in a winning position. The problem with this is that if many of the trades move towards the negative swiftly, then the account could close and they could experience a margin call. A trader should always have a hard limit on the amount of their account that they are actively trading at once. If they start winning their trades, this amount should increase with time (though the percentage should remain the same).

3. Selling Too Quickly 

Some low tolerance traders will sell quickly when they are in a losing position. But most stock trades open in a losing position and then slowly gain steam, and when dealing with signal charts it may take some time to recover any income. Traders need to decide early when they will close a position and wait.

4. Moving Goal Posts on Failing Trades

On the other end of the spectrum, traders who are in failing trades may be tempted to keep their trades open in the hopes that it will turn around. Traders need to accept that they've essentially already lost the money. In order to stick to their analysis and strategy, the traders have to close their position when their strategy says they should. 

Despite the fact that trading is a very disciplined hobby, it can  be extremely easy for people to be emotional about their trading. Learning to control your emotions during a trade is one of the most important aspects of becoming a dedicated trader. As you gain experience, you will find it far less likely that you will be influenced by your emotions -- and, consequently, you'll also find yourself making more money.