4 Common Mistakes to Avoid with Stock Market Trading

4 Common Mistakes to Avoid with Stock Market Trading
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Stock market trading is filled with danger. It’s difficult to be consistently profitable. I recently spoke about the greatest mistakes people make in the stock market. For most people, it’s celebrating too soon and giving up too soon.

I’ve encountered more gunslingers than I care to mention. They always fail. This is why I strongly recommend these four things to avoid.

Never Get Cocky

When you’re winning, it’s easy to get cocky. Think about it like this. The DOW Jones has set 70 new record closing highs since the 2016 Presidential Election. On those numbers it’s easy to get cocky.

But that’s not going to last forever. If you just go by these record highs, one day you’re going to get burned. It may not be today and it may not be tomorrow, but one day you will.

Never Celebrate Too Soon

This is not the same as being cocky. Celebrating too soon is praising yourself when your money is still in the market. Don’t underestimate how quickly things can change.

Let’s go back to the company Zynga back in 2012. In Q2, they wildly missed their earnings target. On the same day in after-hours trading the value of their stock fell by 40%. Imagine losing 40% of your investment while you were sleeping.

You can’t always spot events in advance with the stock market, but you can do much to protect yourself by simply keeping a clear head.

Don’t Quit Too Soon

Sometimes it’s okay to quit, but when most people think of quitting, they are only moments from their reward. I always tell people that just because things aren’t going your way now, doesn’t mean they won’t later. It’s important for everyone to be able to develop some tenacity and grit. Some of my students failed a few times at the start but kept studying and eventually made six-figures inside of a few years.

But you also need to know when to quit.

Let’s go back to our stock market example. Yes, the DOW keeps reaching record highs. But the market is also sending out signs that a crash is imminent. Stock volatility levels are now at their lowest since the 1987 Wall Street Crash, according to the Wall Street Journal.

Never quitting doesn’t mean never quitting. It means being strategic about it.

Don’t Believe the Journey is Easy

The journey is never easy. It takes time to become successful in the stock market. How long will it take? I don’t know. It’s different for everyone.

But whenever it comes to money it takes time. Consider FedEx. The company started in 1962 yet didn’t make its first profit until 1975. Imagine if you invested in the 1960s. It would have taken you between five and ten years to begin seeing any of your money coming back.

The message is simple. Be in this for the long haul.

Last Word – Mistakes in the Stock Market

You will make mistakes; I can promise you that. But I always advocate the importance of the basics. Not making these four basic mistakes will help you succeed in the long-run, deal with unforeseen losses, and master your journey as a trader.

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