Most common trading mistakes and how you can easily avoid them

A loss can be viewed as a liability or as an inspiration to recover and gain twice as much. Sol Palha

investors and most common trading mistakes

A very common mistake that is made by novice market players is that they confuse the term stock market trading, with stock market investing. Then you have investors who confuse the term long-term investing with the concept of buy and hold. We do not believe there is anything one should buy and hold forever; there will always be something better you can put your money into in the future.

most common trading investors make in the stock market

The Investor looks for trend changes, and buys early in the trend; he/she then rides the trend until it ends. One should learn the basics of trend analysis as it will help one determine when a new trend is about to start.  Now let’s go back to the topic of Trading vs. investing. Stock market traders look for short-term rapid gains, they prefer to extract the maximum profit they can from a stock, option, future etc. At least that’s the concept behind trading, unfortunately most traders end up losing more than they win, and even when they do win, they usually end up making less than the long-term investor.

A few traders do extremely well, these chaps fall into the 2% category of overall players. Their gains are huge, but for the rest of the players loss is all the can hope to look forward to. The investor, on the other hand, looks for a new trend and usually tries to get in right at the beginning of the trend. If he/she is more aggressive they try to get in when that particular market is putting in a bottom and has been trending sideways for sometime, indicating that the worst is behind.

Make money in the markets by avoiding these common trading mistakes

Another error that is often made is to confuse long-term investing with the rather falsely promoted policy of buy and hold. Long term investing is getting in early and selling when the trend is over. A classic example was the Internet mania of the 1990’s. The time to buy was in 1995 and 1996 and the time to sell was late 1999 and early 2000, when many of the Internet stocks started violating their main up trend lines. Those that bought the buy and hold lie, found themselves to be even poorer.  A more recent example was the housing bust and mortgage crisis that rocked the financial sector and produced a massive crash.   The right time to get into housing was from 1999 to  2006.  Yes the Market did overshoot, but buying after 2006 was simply not a smart idea.  From 2006 on-wards, the smart player was selling into strength, such that by 2007 he virtually had no position in real estate.   Trend Analysis, mass psychology and technical analysis would have kept you on the right side. We advised our subscribers to bail out long before the housing market topped out and we did the same during the internet bubble.

On the same token we got our subscribers into the commodity bull well before the market started explode. For example, we closed out our Silver positions for over 1000% in gains and Gold and Palladium positions for gains in excess of 700%.  We are only referring to Bullion gains and not the gains we locked in many of our stock positions. We have now come up with the most advanced tool we have ever developed and this tool would have produced even larger gains, were we in a position to use it earlier.   This tool is so effective that since its inception it has an accuracy of over 95%.  For more information click here Trend Indicator. 

We offer two services that cater to both the trader and the investor. The market update service will cater to both the Stock market investor, as it covers  both long-term trades, and trades of shorter duration that will satisfy the needs of trader.  In fact, we have come up with two portfolios.  The trend portfolio is for the long-term player (stock market investor) and the higher risk portfolio is for the trader looking for trades that are more aggressive in nature, with the potential to produce much higher gains.   We will also soon be issuing option trades for the trader looking for even higher returns.  For the investor who simply wants to identify the right trend and know  when its safe to buy, hold or sell, the Market Road Map will be your best bet.   The Market Road Map service will provide the Market Analysis  section from the Market Update service.   In this section we provide both the short, medium and long-term outlook.  We also advice you if you should open positions, sit on the sidelines or short the market.  Click here for full details. 

A very important concept one should learn when one seeks to enter the Stock Market, whether he/she is a trader or an investor is to learn the art of being a contrarian. In short a contrarian investor does something that is totally the opposite of what the crowd is doing. Once more, we at the Tactical Investor have always been known for taking extreme contrarian views, sometimes even contrarians have a hard time digesting some of our views. On that note we believe right now, we are in a multi-year commodities bull market that is about to enter the second leg of this long-term bullish cycle.  For those who missed the first leg up, this is your second chance to make millions potentially if you missed the internet boat and the first leg of the Commodities bull.  This bull market will dwarf the hyper bull market of the internet era. The sector that will see the largest gains will be the precious metals sector, with the  Gold and Silver sector  leading the way up.  This is not going to be an easy bull to play, those that fall for the the  buy and hold nonsense will watch all their gains vaporize during the massive pullbacks this bull will experience .  For the record, the commodities market (Gold and Silver included) fell apart and we got our subscribers out right at the top in 2011.   Those that played the buy and hold game, well you know how they are feeling right now; the commodities sector literally imploded.  Right now we are looking for strategic entry points in key segments of the commodities markets.

Another concept that is often forgotten and separates the stock market winner from the stock market losers is portfolio management. Portfolio management is essential it is one of the most important and most neglected areas when it comes to investing. Many a trader or investor who could have otherwise been successful ends up losing year after year. All the topics mentioned above are covered in much greater detail; all you have to do is click on the highlighted words.

Some of Past Market calls

Articles of interest:

Technical Analysis

Why Mechanical and Technical Analysis Systems Fail

The Limitations of Trend Lines

Contrarian Investment Guidelines

Inductive Versus Deductive reasoning

Mass Psychology Introduction

Portfolio Management Suggestions



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