Top 5 Mistakes Beginner Traders Make

1. Trading too often: Beginner traders often buy/sell their securities too much. They hear a hot tip on TV or a friend and feel they need to sell their current holdings and buy that stock instead. Generally, the only person who gets rich off of this is the investor’s broker, who rakes in trading fees. Trading frequently is also tax inefficient, since these investors often end up paying short-term capital gains tax instead of the lower long-term capital gains tax. Stock education as well as tax education is very important for stock market for basics maximum success.

2. Panicking: One emotion detrimental to investors is fear. Yes, you should use caution and prudence when making investments. However, panicking whenever the stock market goes down never solves anything. Investors that are quick to panic often end-up buying high and selling low.

3. Being Greedy: Jim Cramer frequently says “bulls make money, bears make money, hogs get slaughtered.”

4. Homerun Swings: Investors looking to find the next Microsoft generally focus on stocks with a high potential for growth. In a similar fashion to the value strategy, these investors seek to find stocks that they believe will grow faster than the market expects.

5. Poor Technical Analysis: Some people use charts to predict a stock’s movement. These traders are known as ‘chartists’ and this method of trading is known as technical analysis. Technical analysis tends to be used for short-term trades and if professionally traded will yield higher returns. This is why it is important to use technical analysis for momentum trading. Stocknod Automated Stock Alerts provide this much needed support via monthly subscription.  Technical stock analysis is an absolute for successful traders and now with Stocknod.com this critical technical homework can be provided to you via SMS or Emal alerts.

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