Retail investing can be a fun hobby to do with a portion of your income or a great way to expand your retirement portfolio. The stock market does have some inherent risks, but you can make money if you do your research and have a strategy that works for you. Before you sign up for any stock trading services, learn to avoid these common mistakes made by new traders.
Not Selling a Falling Stock
A number of investors using stock trading services make the mistake of not cutting their losses on a stock that isn’t performing well, thinking they made the right decision and it will increase in value again. Don’t be afraid to set a stop/loss limit trade to make sure you get rid of any stock that decreases by a predetermined percentage. Knowing when to sell is just as important as knowing when to buy.
Putting All Their Eggs In One Basket
Avoid going all-in on one stock. The prospect of the overall gains can be tempting, but it could mean a catastrophic loss if your due diligence is incorrect and the stock fails miserably. Several traders have lost everything going all-in on a stock that fails.
Don’t get too emotionally attached to a stock. This is one of the hardest prospects in trading for a lot of people. Too many people have lost a lot of money sticking with a stock that they have built an emotional attachment to. Try to look at stocks as tools to grow your portfolio, not friends and family members.