As a thumb rule never change the trading style mid way during the course of your trading as it is a sure shot recipe for disaster. We are giving this as a number one trading mistake as new traders or as a matter of fact beginners in stock trading are more prone to committing this mistake.
- They come to market for Intraday trading.
- Market reversal is the order of the day and now it suddenly reverses trend.
- The trader starts panicking as trader has started making a loss.
- Panic Button is Pressed by the Trader and now Hope Sets in the mind.
- Hope factor asks trader to hold the trade overnight and does so, thinking that stock may rebound tomorrow. Vow ! now a "intraday trader" has become a "Short-Term" trader. Now here trader has gone drastically wrong.
Always remember that a falling stock is like a falling knife and as soon as you start giving room to a stock by giving more space to stop loss; you are inviting a sure shot hefty loss in the market. Thus never let ‘Hope’ override your trading plan and stick to it. Thus go by the advice of the professional traders and “Plan the trade and then trade the plan”
How to avoid this mistake?
If as a trader one has identified the mistake than help is at hand and solution for this trading mistake is very simple and same is as elaborated below:
Be ready for two consequences of trade on entering a trade:
- The Trade Goes in Your Favor and in such a scenario, it is a “Balle Balle” situation as you have to stick to your profit booking plan and not let greed overpower you.
- The Trade Goes Against You. This is a tricky part and a novice trader or as a matter of fact any trader has to be ready with a trading plan in hand and if you can follow the same in letter and spirit, than all worlds wealth from stock market is available for you to take home. Thus an Exit Plan is to be ready with you and execute the plan like a machine. Remember that stop loss is your friend and not your enemy and if it is hit, just close the trade and move to another trade as per trading plan. However at the end of the day do analyse the trade where you went wrong. Get away from loss making trade at the earliest as your body provides the first indication whether you are going to make profit or not in the trade.