By rob eagar 
For new entrants into this world of stock trading, getting off to a good running start is not easy and requires much learning. The excitement usually overshadows the reality by potential profits, leading to some common mistakes that could quite easily have been avoided just with a little knowledge or planning. Understanding these pitfall points will help beginning traders make better decisions about their choices and increase opportunities for success. Here are some of the most frequently made mistakes by new traders and how to avoid those mistakes.
1. Skipping a Trading Plan
Traders without a plan is the most common mistake made by amateurs. It is the set of guidelines for your trading strategy, risk tolerance, and specific goals. Without proper planning, give into emotional rather than rational decisions. For instance, reacting to steep rises or drops without considering the long-run implications of the action taken might result in loss.
A well-thought-out trading plan keeps one’s emotions under control and gives it a good structure. There are many traders who take advantage of the best stock trading app to outline directly within the app itself to set reminders and limits on their goals. Bajaj Broking’s platform allows users to outline their trading plan directly within the app, setting reminders, alerts, and trade limits.
2. Overtrading
Many novice traders believe that more trades lead to a greater probability of successful results. However, overtrading can become costly with transaction costs on frequent trading, even through a zero brokerage trading account. In addition, such behavior might also cause emotional decisions in stressful situations and can lead to poor performances.
Instead of overtrading, beginners need to learn the market, fundamentals, and good research behind trades. A balanced approach toward trading will most likely offer far better long-term results than an overly active one.
3. Ignoring Risk Management
Risk management is a fundamental part of trading that many beginners overlook. Without proper risk management, even a few bad trades can wipe out your capital. Setting stop-loss orders, for instance, can limit your losses by automatically selling a stock if it drops to a certain price.
Another strategy to mitigate losses is the 1% rule, in which only 1% of the capital is risked on one single trade. Trading with the best stock trading app usually has instruments that simplify risk management features, such as automatic setting for stop-loss and portfolio tracking. Utilizing those features may prevent minor losses from turning into what may be significant setbacks. Bajaj Broking’s platform includes built-in risk management tools, such as stop-loss settings and automated alerts.
4. Lack of research on stocks end
Many new entrants are investing blindly in stock, mainly after hype and tips from friends, where proper research is not done. Their decision based on rumors or some trend without verifying the healthy financials of a company and its market is extremely risky since each investment through stock should ideally be built upon careful analysis, based on earnings, industry placement, market conditions, and so on.
For the newcomer, zero brokerage trading accounts do help bring down the cost of trading but does nothing towards reducing the requirement of doing proper research. It’s proper research that leads one to good decisions and some common pitfalls.
5. Chasing Losses
Another common mistake is seeking to “win back” losses by doubling down with high-risk trades. These actions are called revenge trading, and they only accelerate losses. Chasing loss is not a way one should handle loss, nor is it something to revisit over and over. Get a clear mind by being willing to accept the reality of loss and then see if your trading plan will work for you, considering making adjustments as necessary, to avoid emotional trading.
Even beginners using the very best stock trading app, you can use daily limits or weekly limits on trading which will help you create boundaries so you don’t reach over a certain risk threshold, especially when things just aren’t going well.
Conclusion
New traders commit the most simple mistakes that would have been avoided through proper knowledge and preparation. The common ones are trading with no strategy, overtrading, and ignoring risk management. All these simple mistakes can keep beginners from falling into pitfalls and building a more sustainable trading approach. Remember that with tools like the zero brokerage trading account or perhaps the best Zero Brokerage Trading Apps, a better experience when trading is seen, yet all this means nothing without strategy and discipline and continuous learning.
Read Also: Long-Term vs. Short-Term Trading: Which is Right for You?