Errors of novice trader on the stock market
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    Super Moderator Gulfstream's Avatar
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    Errors of novice trader on the stock market



    The exchange stock is the place where we are coming to earn money. By a strange coincidence of some things, the rest of the market participants are coming here with the same purpose. But the amount of money in nature is limited, so the winners in this struggle for money are the wisest ones.
    Unfortunately, wisdom does not come immediately, so novice traders make mistakes. As a rule, errors, which they make, are of the same type.
    In this topic, we consider the most common mistakes of novice stock traders.


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    Super Moderator Gulfstream's Avatar
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    How many times have I stepped on this rake! First you recognize some negative information about the company, you are looking for a good moment to sell, you sell ... and instead of going down, it rushes up like a tank ... you sell more and then becomes the "corner".

    One of the contemporary examples is about Apple company - in 2016 APPLE come out with not the best quarterly report for the first quarter, people began to sell shares. And then it turned out that while "the people were selling", Buffett bought "Apple" for a billion dollars and the price instantly won back all the fall and rushed further into heaven.

    Stock market is growing by its nature. It is possible to catch rollback, but the probability of this is quite low. Therefore, you need to think 100,500 times before shorting the stock, even if it is negative.

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    Super Moderator Gulfstream's Avatar
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    The error of 99% of novice traders is to sit too long for catastrophically growing losses and quickly fix the minimum profit.
    Successful investors are patient, they know that it is impossible to predict the situation on the exchange exactly. Therefore, they choose only high-quality assets for their investments.
    The "golden" rule of the stockbroker - "Let the profits flow and quickly cut the losses."

    This story, which was told by the outstanding investor Warren Buffet, is very instructive: he made his first investment at the age of 11 - he acquired 3 shares of Cities Service for $ 38 per share. After that, the quotes of these shares rushed down and fell by almost half. After a few months, the price still returned to previous levels and reached $ 40. After seeing that he could sell his shares at a profit, eleven-year-old Warren immediately sold his three shares.
    ...Just in a couple of days, Cities Service’s shares have already been quoted at $ 200 each.




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    Super Moderator Gulfstream's Avatar
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    Selling favorite.

    After intensive growth, growth leaders often have a slight pullback - some kind of “cooling”. Some players are trying to “catch” such a reverse movement, taking a “short” position on the stock. Frustratingly to stubborn bears, after a small pullback the price will most likely go further upwards with double energy (the “double energy” will appear due to removal of short positions ”). It is much more expedient to catch a pullback to enter a long position - follow the“ trend ”. And if the favorite breaks the historical maximum at a good volume, then you can buy it and not on a pullback, but “on the breakdown.” Just do not forget about the stops: even a false breakdown can happen to the favorite.

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    Super Moderator Gulfstream's Avatar
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    about errors

    Very often in the stock market quite obvious ideas do not work.
    For example, in the 50s of the last century, it was quite obvious that air travel would grow at a faster pace, so airline stocks should be bought in long-term. Air traffic, indeed, grew. But the costs of airlines also increased. As a result, the profitability of airline stocks was rather weak.
    And those investors, who bought airlines “on take-off” moment, turned out to buy shares at an inflated price.
    A competent investor always relates what he buys and how much he pays for it.



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    Super Moderator Gulfstream's Avatar
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    Regarding little-known shares, they definetely are “pig in a poke,” you never know what will happen with them tomorrow: should it be new Google-Amazon-iBay, or with a much higher probability bankrupt and liquidation in a couple of months (conditionally). The collapse of dot-coms can be recalled as a good example of how “cheap stocks of obscure companies” are quickly blown away. They also can have an incomprehensible price: for example, there is a purchase of 3, and a sale of 5, but the purchase is worth 1 share, and for sale - 100 - you start selling, you sell 1 share - the purchase has completely disappeared.
    If a company is cheap, then buying its shares is akin to playing roulette (or binary options).
    You won’t earn much on chips, but you won’t lose much there (if you don’t short)

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    there is no doubt that every field of work can has each difficulties and for the beginners can be real trouble to trade them effectively . thus there may be some weak points in the learning course they have or may be in the way they apply the changements for the trading thus the trading itself can learn the intelligent trader how to avoid his own mistakes

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    Trader layigold's Avatar
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    Quote Originally Posted by Gulfstream View Post
    How many times have I stepped on this rake! First you recognize some negative information about the company, you are looking for a good moment to sell, you sell ... and instead of going down, it rushes up like a tank ... you sell more and then becomes the "corner".

    One of the contemporary examples is about Apple company - in 2016 APPLE come out with not the best quarterly report for the first quarter, people began to sell shares. And then it turned out that while "the people were selling", Buffett bought "Apple" for a billion dollars and the price instantly won back all the fall and rushed further into heaven.

    Stock market is growing by its nature. It is possible to catch rollback, but the probability of this is quite low. Therefore, you need to think 100,500 times before shorting the stock, even if it is negative.

    In every kind of financial market , traders must get adequately prepared for strange happening which sometime comes into effect unannounced . If I were to take position in the instances given here , I would have equally come short of APPLE stock because there is no sane trader who would want to hold or buy the stock whose company's quarterly earning is not impressive .One thing I discovered is that big players ( institutional investors ) would not go in the way of the multitude , they rather go the opposite way to accumulate the positions of retail traders and this scenario plays out in any type of financial market

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    there is no doubt that the new traders can be very hesitated to enter or to analyse the market well . so they may find that there are many points to enter and this can be very clear to show the real meaning fro the money management they lose . to . this is one of the mistakes they may suffer from . and thus the long term study can be very effective for them at first

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    There are four biggest mistakes that are made by every trader in this market the first one is to rely too much on gut feeling and emotions. And the second one is closing the winning trade area and the opening of losing trades earlier and drive without having the patience to let the market and the third thing is poor account management which leads to the devastation of the account without making money in the long run.

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