Mistake most amateur traders repeat time to time

On an average 95% of retail traders loose money in Stock market. That means not even 1 out of 10 is profitable! But most of these people who loose money do the same mistakes. Well, even I have done these mistakes at some point of time.
I have spoken to many traders as part of my site and also my courses. Almost everyone has the same story that why their trading account got bust at some point of time.

Lets discuss few mistakes which most of traders repeat on regular basis.

Not taking Trading Seriously: Most of the people who start trading don’t take it seriously for the first 1 year. Most of Retails traders are drawn in market at the end of Bull run where prices are jumping leaps and bounds.  They just trade to experience that feeling to anxiety and excitement when the stock prices change every second. They never do there own analysis but listen to few people and and start trading. Initially it doesn’t matter to them whether the they are making loss or profit, but soon they realize that their whole capital is eroded. It’s more like a gambling for them.

Over Leverage and Over-trading :Most of traders  get excited when there broker says you can take position worth 10 lakh with 1 lakh capital, 10-20 times margin is quiet normal in bull market, Leverage is like a twin edge sword and most of traders do not know how to use it rationally, if you do not know how to use it, its gonna hit you bad very very bad. People started over-trading as they could now trade for as much as 10 times of their capital. Small profits made them happy but a big loss wiped off their entire trading capital.

No Stop Loss: Stop Loss is the price where your positions are automatically squared off. Its a measure to limit your losses. But generally beginners don’t put stop loss order, thinking that there position would break even or move to profit zone in a course of time. But eventually the losses grow and these people regret of not putting a stop loss order. Every novice trader has this trait that they limit their profits and let their losses to grow.

Naked Options trading: Basically options were introduced in markets as a hedging instrument, but people started trading on naked options. Most of traders do not know basis of Option geeks, but have listened few stories on traders making 3-4 times in few days doing option trading. Amateur traders believe in these one time wonders and start trying their luck on options. They don’t realize that options are one of the most complicated trading instruments and it requires years of practice to tame options.

2 thoughts on “Mistake most amateur traders repeat time to time”

  1. My experience….FNO trading is 25% trading plan, 25% trading experience and 50% your self control to follow your trading Plan as a Robot

  2. Well said guru ji, all amateur/retails traders should learn the skills and follow the rules of the game to gain money in markets.

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