Trading is not an easy game. There are so many subjective angles to any market that it almost seems impossible to make money at times. However, the more mechanical you make your trading, the more successful you will be. There are certain common mistakes we see traders do that don’t necessarily seem like mistakes to them.

1. Averaging Down on Emotion – Everyone is reluctant to take a loss and the desire to “double-down” is natural. Your broker probably tells you, “We liked it at $20, we LOVE IT at $15”. Well, that’s an amateur view and not worthy of your trading dollars BEFORE YOU ENTER A TRADE, KNOW WHY YOU ENTERED AND WHERE YOU WILL EXIT.

2. Missing the Trade for a Penny – If you think the stock is going to go to $100, what’s the difference between buying it at $50 or $50 1/4? Don’t make the right calls on your signals only to miss the trade because you tried to nit pick it. See the bigger picture. It’s not to say you shouldn’t try to enter in the right areas. Simply don’t be penny wise and dollar foolish.

3. Buying Hot, Watching Cold - Traders buy a stock from a tip on a message board, a news article or on a TV spot. More often than not, the stock has already begun its move. In fact, the TV spot or news article may be about the stock's sharp run. After purchase it subsequently takes a dive as he is the last one in and the issue goes cold. Remember, stocks are like buses; there’s always another one coming. Thus, do your research and don’t try and short-change the system.

Trade well

Trader Ric