What one must not do?
1) Do not panic:
The trader should not panic when the trade goes in the opposite direction. The trader should act calmly and trade effectively. Also the emotions and greed should be prevented while trading.
2) Don’t make huge investments:
The trader should not make heavy investments right from the beginning. They should start from a small investment and should increase slowly.
3) Never Chase Performance:
The trader should not try to chase the performance. A stock is not a valid investment, if the prices have been rising. Once the traders will start selling the prices can fall down also. Thus the performance will be dependent on fundamentals.
4) Don’t try to ignore expanses:
The traders should try to take care of the expanses like brokerages and tax while trading. The brokerage and taxes have sometimes major impact on the overall profits earned.
What you must do?
1) Try to Diversify:
The trader should try to diversify as much as possible. The investments should be made in different sectors, so that one sector goes down the other sector covers for the losses.
2) Try to follow some strategy:
The trader should follow some strategy to trade effectively in the stock markets. Also the trader should try to follow the strategies accurately and completely. The trader should not leave the strategy under the influence of emotions.
3) Try to use stop loss:
The trader should always use stop loss with the trades initiated. The stop loss prevents the trader from incurring heavy losses. Proper levels of stop loss are also important for incurring good profits.
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