Getting into stock trading is easy. Just sign up with any leading brokerage like TradeStation and jump right into the world of stock trading. However, to succeed as a trader, it requires a different set of persona, mental discipline, intellect and a gumption of luck.
Statistically, not more than 10% of stock traders succeed in making a decent living off trading. There are many reasons why stock trading would fail miserably for the average person. Here are three reasons that I can think of, derived from my experience as a trader and investor for the past 20 years.
I. Blind Hope
Hope is the enemy of objectivity. One of the most common mistake a rookie can make is to hope that the stock would bounce back after its relentless downward trajectory, or to hope the stock would continue its unbridled ascent. A seasoned stock trader does not hope. Instead, he relies on his internal metrics to determine whether to cut loss or take profit.
Stock trading is like a multi-year war. Losing a battle does not mean that you have lost the war and vice versa. So, lose that ego of yours.
II. Lack of Research
Sometimes, it just bewilders me when a rookie jumped right into a stock just because his friend told him so. Uhh… as friendly as friends are, when it comes to money, I would still prefer to be a bit more astute. After all, you do not want to be the last man to hold the ball. Before buying any stock, you must always do research on it. Study the annual reports, dig up the latest news (or shits) about the company, do as much due diligence as you can. The goal is that you would be able to explain why this stock that you are buying is worth it. When it comes to the domain of stock trading, diligence usually wins.
III. Not Knowing When To Buy
So, you have identified a stock, researched a ton on it, and now you would like to pull the trigger. So, the next equally important question is – when should you enter? This is where many stock traders flop. Seasoned stock traders often rely on quantitative tools like a stock trading bot to help them enter positions. For new stock traders who are interested in dabbling in automated stock trading, they can check out StockHero.
In essence, it takes a long time to master the psyche of a stock trader (less hope, more objectivity. Less emotion, more clinical) but if one uses a stock trading bot to help him trade the stock market, the journey to be a successful stock trader should be accelerated.