How To Become a Stock Trader – An Idiot’s Guide You Should Not Follow
By now, you’ve likely read plenty of tips and guides around how to become a stock trader. But then the paths to build a high-worth portfolio is just as much about the things that you shouldn’t do as it is about what you do.
In that context, if you’re a new stock trader, here are five things that you should NOT do:
1. Betting all your money in one-go
You’re just starting, you’re excited, and you have enough money – it’s only natural that you want to put that sum in those stocks that seem to be doing incredibly good at present.
However, what many new traders need to realize is that the stock market is quite dynamic. With so many factors influencing the moves, a trend can change upside-down any minute.
So, at least for the beginners, betting all their money in one-go on one or a few stocks is a bad idea no matter how fool-proof it looks.
It’s an unnecessary risk that must be avoided. Portfolio diversification is the golden rule of the game. The sooner you learn and embrace it, the better it would do for you.
2. Trying to recover your loss quickly
Emotional trading is a big villain to even the successful traders who slip often on this blunder. As a stock trader, if you can’t control and manage your emotions, it could turn up to be quite fatal for your portfolio growth.
But then that’s easier said than done.
When you’ve lost your money, you would naturally want to recover that sum as quickly as possible to get in the game.
It’s not a wise move. Trading hastily with emotions, where rationality takes a backseat, you are more likely to make bigger mistakes, which would take you to further losses.
3. DIY’ing without a proper plan
If you’re looking to become a successful stock trader, you’re going to need the right people, resources and adequate knowledge with you.
This narrative that you can learn how to become a stock trader and start making money quickly is flawed.
While self-learning is important, DIY’ing is only going to help you so much. Opting for a good share trading course from a renowned expert is always a good idea.
You would learn more – and not just the basics but also the advanced concepts, including technical analysis.
We have discussed this in detail. Please read: 3 Things Stock Trading Courses Teach That DIY Resources Can’t.
4. Copying others’ plans and strategies
This is a BIG mistake that many beginners fail to realize.
Yes, while successful stock traders are a great source to get your inspiration from – you can learn a lot from them – copying them entirely, however, is a bad idea.
Different traders have unique needs, requirements, and goals. They have their own appetite for risks. Moreover, their trading style varies.
So, even when their plans and strategies have yielded them good returns, that’s not how it might work for you.
So, do not blindly follow them. Draw inspiration but avoid copying. Outline your own distinct plan and strategies.
5. Thinking too much before every trade
Smart stock traders are also opportunists. They make quick moves to act ahead of others. While it can be risky, this enables them with high returns.
If you’re taking too much time before every move, you’re missing a lot of opportunities.
Sadly, this is exactly what so many new traders do – often even falling for ‘perfection paralysis’.
Do not waste too much time thinking and planning unnecessarily. Make quick moves to grab the right opportunities.
Of course, this might not always be possible. It’s a fluency you would reach after continuous learning and execution.
These are five things you should NOT do.
Now, indeed, there are plenty more things you must steer clear of. But for the starters, stay away from the above-mentioned ones.
Here are some of the recommended articles you should read right away: