Top Ten Mistakes To Avoid In Today's Stock Market
By Adam Mesh
March 18, 2008
Page 3 of 4
8.) Being Diversified Can Hurt You - If the market is heading down then being diversified means you are increasing your chances of losing money. Think about it, if the majority of stocks are moving down then a diversified portfolio means that you are more likely to own stocks that are going down. Instead, you want to be trading individual stocks or profiting from the hot sector. By being specific and particular, you are navigating through a downward spiral and really taking strong measures to dramatically increase your chance of success.
9.) Expect The Best But Prepare For The Worst - Too many people enter into the stock market with high hopes. They have learned that you need confidence to succeed in life or they read The Secret. Either way, they have always been told that it's better to focus on the good than the bad. That's true BUT you need to be prepared for doomsday scenarios such as, "If this stock went to zero, would my life change?" If the answer to that question is yes then you have too much money in the stock market and you need to make changes. You should not trade stocks with money you can't afford to lose. Your rent should not depend on the price of the stock. You should trade stocks when you have money set aside for that exact purpose and you know that this is money that you are looking to grow and snowball into something big but it's also money that you are willing to risk. The stock market should only be life changing in a good way. There are no guarantees in the stock market and if anyone tells you otherwise, they are lying.
10.) Don't Focus On The Money - When trading stocks, you can't focus on the hundred dollars you made or lost or the thousands of dollars you could have made or should not have lost. If you get in the habit of focusing on the money then you will cut your profits short. Now, I know I just said to expect the best but prepare for the worst. Assuming you've done that then you are now trading with money set aside for trading. Now, stop focusing on the money. Just focus on the right and wrong of trading and the money will come. Learn from your mistakes, remember the good things you do so you can repeat them and focus on the right and wrong. This will allow you to eliminate emotion and take your trading to a much higher level.
Now, the key to avoiding all of these mistakes and the one thing you must possess to have any chance for stock market success is Discipline.
In the stock market you will either learn the pain of discipline or the pain of regret.
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Adam has been a trader for over ten years. His trading success has been featured in Fortune Magazine, Trader Monthly, and he has also appeared as a guest on CNBC's Squawk Box. Following the sale of his trading company in early 2006, Adam devotes his time to helping individuals succeed in the stock market.
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