Most Dangerous Online Trading Mistakes to Avoid

A bunch of new traders daily make a way to the investing market to flock to fulfil their big dreams. Fortunately, the trading market is full of opportunities and has incredible potential to earn money. However, only a handful of investors get success in the game due to self-discipline and the right approach. Most of the other traders make a dozen mistakes, even after knowing them. If you have a thought to enter the market, then you better avoid it to make a mark.

Here are top harmful mistakes which every online trader makes and regrets later.

Top Online Trading Mistakes

Trading Illiquid Stocks: If you're trading low price stocks, ranging between one and ten dollars, then it must have a volume of one million shares or more a day. If they're not trading a million shares, you need to avoid them. These are considered illiquid stock & it's challenging to get in and out of those even with small position sizes and ultimately you'll end up burning your profits. The next is focus on stocks that have run in the past. The past tends to repeat in these momentum stocks. Traders remember these tickers. Look for volume, look for stocks that have run in the past.

Not having a plan: You have to know why am I buying into this stock? And if I'm buying it because it's moving. You have to have more reasons, more criteria than that, look at the chart, at the news, in the sector, and more. One reason to buy a stock just because it's up big or just because it's in a significant industry is not a reason to trade it. Line up as many variables in your favour, and that is going to give you the potential for success. Don't make random trades as it will burn up your account as a small trader. They will burn you up in commissions. You'll get frustrated, and you'll quit. With a plan, you know what you're going to do before entry.

Letting Losses Run: The beauty of low priced stocks is that they make big moves. That means you can make big money. The problem is they can make big moves against you too. If you don't have discipline and don't stop out where you said you would, this goes back to number two mistake, i.e. not sticking to the plan. You have to stick to that plan and stop out where you said you would. If traders let losses run, they will burn up their accounts and remember if you lose $500, you need to make $500 back to get back to breakeven point. If you let those losses get big, you need to do so much work to get back to where you were last week. If you're staring at that trade and that red number is getting bigger, think about that. Stick to your plan. Nobody ever wrote that I'm going to risk my entire account on this trade, but people do it every day. Have a plan & stick to that plan.

Overtrading: The oddest thing in new traders is they don't overtrade when things are going well but do it when they are not. They're happy with their $500 a day and walk out, and they're done by noon because they're satisfied with their goal. So, they trade that one time a day or maybe that two times a day or whatever that number is. Then the bad times come, they start seeing red, and they want to overcompensate, and instead of making one trade a day they start making two, three, four, or five. However, it comes with experience but if you're doing well trading once a day, twice a day, why would you ever expect that you would get out of a bad spot trading three, four, five, six times a day. If anything the inverse is true. When things are going well trade more. Things go wrong but avoid overtrading, and that's how you blow up.

Broker: Last but not the least mistake is choosing the wrong broker or the cheapest one to save some pennies. However, a wrong or fraud broker attract clients through different tactics, i.e. either too much offering or low cost. One good method is to select one regulated broker and is better if it provides a demo account for testing. Many brokerage firms like HFTrading, T1Markets, or 101investing, offer demo service and other useful features & are also licensed.

HFTrading Broker

The well-known broker HFTrading provides one free demo account along with other accounts including gold account, silver account, platinum account, professional account and Islamic trading account. The minimum deposit to open trade in all these accounts is $250.

How to open HFTrading account?

Account opening with HFTrading requires three simple steps:

1) Visit the official website of the broker. Get yourself registered by providing some necessary information such as name, surname, mobile number, email id and profession.

2) The next step is updating all the mandatory documents for verification of the details provided in the above step along with the income certificate.

3) The final step is choosing the market or stock (if you wish to pursue trade in the stock market) and depositing the essential charges for the same.

The steps mentioned above are not just for HFTrading. All these steps are common for all authentic financial service providers.

The Bottom Line

So, these were the most harmful online trading mistakes to avoid if one wants to make a noticeable mark in the investment industry. Write all of them down, don't make these pitfalls, or if you do, recognise and try and get that little bit better. Remember, even 1% better a day is a recognisable change in the financial industry. Learn from that mistake and try and minimise your potential to make it again in the future. Focus on that improvement idea and try and get a little bit better each day.