9. Plan your trades and trade your plan
Use the quiet time when the market is closed in the evening (or in the morning if you are an early riser) to plan your potential trades for the day – what you will buy or sell, and at what price. This is your daily Game Plan. Once the market is open, there may be little time for thinking clearly. Make it a rule that you will only make a trade if it is on your plan. This will prevent the spur-of-the-moment, emotion-driven trades that often plague the ‘newbie’.
10. There is no such thing as ‘cheap’ or ‘dear’
How many times have you looked at a stock and thought that it can’t go any lower – and then it did? For every seller there must be a buyer, so during the dark days of the subprime crisis when the market was tumbling, every day somebody was thinking, “It can’t go any lower.” It’s called ‘trying to catch a falling knife’. Just realize that the market can stay irrational longer than you can stay solvent, and buy only for a more solid reason than, “It looks cheap.”
These 10 common mistakes are bumps on the path to learning to invest and grow your money. Avoid them, and your path will feel much smoother. Happy trading!