lunes, febrero 04, 2008

Trading Mistakes

Un buen blog al que suelo recurrir a menudo es el de Chris Perruna. En su último post Trading Mistakes: Avoid at all Costs nos relaciona una serie de errores que debemos evitar... con el permiso de Chris ...



Common Mistakes to Avoid while Trading:

Failure to cut losses: Pride, ego, or stubbornness prevents the trader from selling.

Not knowing “how much” to trade on each position: Overtrading positions can kill your account and take you out for good (risk of ruin). (Learn to
position size)

Average down in price: Placing good money after bad is a loser’s game.

Listening to rumors: Forget the talking heads, rumors and tips as they are nothing but garbage and a sure way to substantial losses

Lack of patience: It takes years to master trading as an advanced skill; even then, you are never done learning or adapting

Not knowing
when to sell: Determine your price objectives and risk-to-reward ratios prior to entering the trade; never allow emotions to make this decision.

Buying 52-week lows: Don’t be afraid to buy stocks making new highs. The garbage sits at the
bottom along with weakness and downward momentum. Buy strength and the
momentum moving higher.

Pure Fundamentalist:
Technical analysis is a must! Use candlestick charts that show the price, volume and major moving averages – this is all you need, don’t complicate the process.

Making trading decisions based on taxes: Never buy or sell based on taxes alone.

Buying based on dividends: Don’t buy based solely on dividends; most growth stocks will never give out dividends

Buying familiar names: Yesterday’s leaders are not likely to be tomorrow’s stars. Look
for solid new companies with great earnings, sales and a product in demand.
Don’t buy a stock based on a popular household name.

Lack of action: Be able to move on a dime. Time is money, don’t procrastinate or hope for something that may never happen.

Lack of Consistency: Develop a method suited to your personality; stick to
it and don’t trade blindly.

Emotions:
CONTROL EMOTIONS - RULES ELIMINATE EMOTIONS!

The
secret to winning big in the market is not to be right all the time but to lose the least amount of money possible when you are wrong. As long as you win larger than you lose, you will become a consistent winner at the end of each year.


Un saludo.

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