Basics Stock Trading

Stock Trading- 4 Tips on How to Avoid Losses Trading Stocks

There is one undisputed law that every rational investor, stockbroker and expert analyst globally have all accepted, and that is price of stocks rises and falls depending on the prevailing indices per time. By that I mean that stock price rises and falls every now and then due to market activities and forces that take place within and outside of the capital market.

If this is true, then every investor must be abreast with certain undercurrent negative and sometimes very dangerous human emotions that lurks around ever ready to pounce on unsuspecting investors, leaving behind bitter tales of woes in the mouth of it’s victim. Let’s begin to itemize these danger signals or red flags if you like.

IGNORANCE.
Research have shown that when an investor is ignorant of basic stock trading skills that affects the swings of the prices of shares on the stock exchange, they always end up being slaughtered as chickens in the chicken farm.

ENTRY AND EXIT SKILLS
When an investor is ignorant of the best time to buy a stock and the best time to exit from such stock, they end up having their fingers burnt severely. Per time, every stock has its period of performing well, you must find out the suitable and fitting time to invest in a stock. Every stock has a peak price when equilibrium is achieved; at that point the rising of stock prices begins to dip. How do you know, the stock at this point ceases to gain the minimum 5% capital daily appreciation. If you are a trader, this is the best time to bail out.

GREED
Every investor including you that is reading this write-up is like the proverbial Oliver Twist, we always want more whenever we make profits from our trading, and it is a human emotional weakness every investor must watch. Let me paint a picture to drive home my point.
Mr. Smith (imaginary) buys Fidelity shares for $4 and the price rose to $12. The increase came sooner than his projected time and price, he had projected $10, but because of the emotion called greed, he defied the wise counsel of his broker cum analyst to sell at $10, without understanding the factors that was driving up the price of the stock, he thought the upward rise will continue to $20, unknown to him the stock had reached its equilibrium at $14 and suddenly began to dip at a frightening pace down to $2. Please remember you cannot always beat the market.

OVER DEPENDENCE ON STOCKBROKERS

Stockbrokers are fantastic people, in my world; the importance of a stockbrokers cannot be overemphasized. My organization work hand in hand with them.There are definitely stockbrokers that knows their onions; nevertheless I submit that to overly depend on them, can sometimes be detrimental to the health of your portfolio. Some stockbrokers will offload their ignorance, fears and burden on you if they notice you’re equally ignorant of stocks investment skills.

In this information age, it will be to your immense benefit, if you can sacrifice time and cash to posses useful stock informational materials that have the capacity to turn things around for you.

About the Author

You can have access to other informative and impactful articles at http://stocktradingrevolution.blogspot.com

John Efetobor is an Investment Communicator, Analyst, Motivational Speaker, Coach, Trainer, Human Developer, Investor and Businessman. He has a Stock Trading Revolution Blog where he writes informative articles on Stocks, stock trading and other Vital aspect of stock investment Visit: http://stocktradingrevolution.blogspot.com for more information.

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Basic Stock Trading Lessons – “Sell Limit” Order

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