TRADING MISTAKES - 2

Mistakes are the usual bridge between inexperience and wisdom.  ~Phyllis Theroux

Emotional Trading :Due to lack of experience, novice traders trade with emotions. Sometimes their ego is on stake. They enter into trade with hefty greed and close it with exaggerated fear. They trading instinct is easily stimulated by rumors, news and decision is made in haste without the backing of rationale. Sometimes greed comes into trade and profits dwindle to eventual loss with a hope of larger profit. One thing is very common among novice trader is a panic reaction with price fluctuations. If a trade is fail they are unable to accept that they committed a mistake thus carry a position to a level where the losses swells to uncontrollable level. They always rejoices even the smallest profit with great fanfare and gets dejected if they incur any loss. And this attitude severly affects their trading temperament for upcoming trades. Greed, fear, haste, impatience, dejection, exaggeration all these emotions hamper the trading activity.

CONFUSION

Yea confusion prevails regarding the course of action. I havent tracked global market for straight 3 days. Not even the political scnerio that has significant bearing on market movement. Yesterday I recommended IT stocks though they gave good opening today but lower volume in index in second half pulled them back to lower than yesterday level. Still most of the indicator still suggesting to keep long positions in IT stock thats what Im doing. One important signal I witnessed at the end of the day is the baseline that infosys is forming at 2900 level. Its a value buy at this stage and after 4-5 months people will regret not buying at cheaper price. And surprisingly what I saw in IT yesterday found in Banks today. These two sectors are going to lead Nifty to 6000 level in next 2-3 trading days.