If you are familiar with the market, it is easier not to stumble into pitfalls. Small mistakes such as entering the wrong stock symbol or setting the wrong buy level are very common. These, however, are small mistakes that in the best case scenario might even turn out to be lucky moves. Poor judgment, though, is different from simple errors. Falling victim of bad judgment can ruin your whole career in trading.
Think of trading mistakes like driving a car on icy roads. If you know that driving on ice is dangerous, you can avoid traveling in a sleet storm. But, if you know nothing of the dangers of driving on ice, you wouldn't think twice about it, and you would probably have an accident.
New investors often waste a lot of time and effort trying to predict trends. Traders can use very complicated formulas, indicators, and systems to identify possible trends. Some put so many indicators on the screen that they can't even see the price of the stock any more. The problem is that they lose sight of simple decisions about when to buy and when to sell.
The main problem related to this is that some investors try to learn too much at one time. Some people think that the more complicated their system is, the better it will be at "predicting" trends. And unfortunately, it is nothing more than an illusion. Even if it is nice to rely on some technology, we can't overlook a simple fact: One should buy when the market goes up, and sell when the market goes down. Buying and selling early in a trend is essential, so you should be aware of when a trend starts. Complicated indicators only obscure this information.
Remember to keep it simple. Trend lines are wonderful tools to identify trends. Trend lines are straightforward ways to let you know when you are seeing an uptrend (when prices make a series of higher highs and higher lows) and downtrends (when prices show lower highs and lower lows). They are able to show you the upper and lower limits of up trends and the upper and lower limits of downtrends, and, even more importantly, they show when the trend begins to change.
It might take you a while to study trend lines before you become comfortable enough to use them. Only after using these early indicators should you start using more specific strategies to determine your exact buy or sell point. You can use systems such as RSI (Relative Strength Index), moving averages and turtle trading. But, don't use them until you've determined if the market is trending.
Think of trading mistakes like driving a car on icy roads. If you know that driving on ice is dangerous, you can avoid traveling in a sleet storm. But, if you know nothing of the dangers of driving on ice, you wouldn't think twice about it, and you would probably have an accident.
New investors often waste a lot of time and effort trying to predict trends. Traders can use very complicated formulas, indicators, and systems to identify possible trends. Some put so many indicators on the screen that they can't even see the price of the stock any more. The problem is that they lose sight of simple decisions about when to buy and when to sell.
The main problem related to this is that some investors try to learn too much at one time. Some people think that the more complicated their system is, the better it will be at "predicting" trends. And unfortunately, it is nothing more than an illusion. Even if it is nice to rely on some technology, we can't overlook a simple fact: One should buy when the market goes up, and sell when the market goes down. Buying and selling early in a trend is essential, so you should be aware of when a trend starts. Complicated indicators only obscure this information.
Remember to keep it simple. Trend lines are wonderful tools to identify trends. Trend lines are straightforward ways to let you know when you are seeing an uptrend (when prices make a series of higher highs and higher lows) and downtrends (when prices show lower highs and lower lows). They are able to show you the upper and lower limits of up trends and the upper and lower limits of downtrends, and, even more importantly, they show when the trend begins to change.
It might take you a while to study trend lines before you become comfortable enough to use them. Only after using these early indicators should you start using more specific strategies to determine your exact buy or sell point. You can use systems such as RSI (Relative Strength Index), moving averages and turtle trading. But, don't use them until you've determined if the market is trending.
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