This is bad information. I can predict more accurately where my instrument will be an hour from now, than where it will open/close tomorrow or next month/year. If you don't realize this, run as far away from markets as you can
No kidding - it only random to the extent one can't read a chart (PA) =============== Aside; Cracks me up every time I read someone espousing the mkt random Then..., out of this "supposed" short term randomness.., comes long term deliberation And exactly how does that work (rhetorical) RN
"What are the biggest mistakes a trader should avoid in stock trading?" Day trading. Learn how to trade longer term, this gives you time to study, back test, learn AND memorize, as you get better than go shorter term if that is your goal. Don't get married to a position. 95% to the right of the chart is more important than on left side. When playing poker, if you can't find the sucker at the table, you will be him. Same with trading, if you uneducated.....
1. do not jump into trading without previous research and back-testing... 2. Trust no one no matter how atractive it looks like. BACK TEST EVERYTHING 3. Even when youfound a system which on your opinion works, onitor volatility on higher timeframes. Whith changes in volatility you may need to adjust you system to volatility. In periods of low volatility price trend changes are prolonged in time. In periods of high volatility price changes its trend much faster. It is wrong expect that there is a "magic system" or "magic chart's setting" which would work all the time. There always will be periods when a system generates signas either too late or too early and it always comes with changes in volatility. Simly adjust your trading to volatility or avoid periods when your system does not work.
Not doing your homework is one of the biggest mistakes. It's mostly about (long-term) statistics and probabilities, ranking etc.; ie. research in general, not only the usual TA and FA stuff. It also depends on the timeframe of the trader, ie. a HFT bot, daytrader, swingtrader, long-term investor... all have different requirements... common to all is doing a good research of the past and of the current market conditions/climate to be able to make a good forecast of the near-future...
Same methodology as far as I'm concerned. The difference is that DCA is for buy-and-holders, those who have faith their investment will eventually rise ever higher. But for traders, DCA makes no sense. We buy when the trend is up and sell/short-sell when the trend is down.
Don't be in a hurry. Don't expect stocks to not vary up and down. And never panic and sell too early. If you did your homework, you will be able to tell the company will come back up again.
With all due respect to your vast knowledge and experience, I don't agree with this. I believe that most traders have issues with thinking too much about a trade, and becoming affected by the outcome of any one trade. If we set aside the need for a plan, which is of course the case for both day trading or long term/swing trading, then what we have left is execution. Simply, longer term trading doesn't allow for building this important skill. If you enter only 2 positions a week, and they are both losers, you will dwell on this, and it may very well affect your ability to put on any more trades the following week. Also, the losses might be bigger for longer term trades since your stops and targets will be bigger as well. Lastly, if you're having too much time to think about the trade, you might start looking far too deep as for why this trade didn't work, and although there may be ways to increase a win rate by looking for other clues as for why certain trades shouldn't be taken, I'd say most traders have less than a 70% win rate, and hence being focused on squeezing out a slightly higher win rate might not actually be the best way to make more money. It might provide psychological comfort to have a high win rate, but this might not lead to more money, especially if it means less wins, along with less losses. Correct me if I'm wrong Handle, but I do believe that you said you once has a string of 22 losses in a row, which you said was within the limits of your trading plan. If a retail guy had this happen to swing trades that are in the works for a few days each, 22 losses in a row might be 3 months of not having a single win, which would be hugely emotionally destructive. So although day trading might not be easy, and tight stops might often kick you out of trades too soon, what it has going for it is instilling the proper trader's mindset. You put on a trade, you win some, you lose some, you move on to the next trade. Hopefully the losses are small, and hopefully the wins are a bit bigger, and hopefully after a series of trades you've squeezed out a tiny profit, perhaps break-even, or maybe a small loss, but if you're at least letting your trades hit stop or target on each one, you shouldn't lose too much. If you're always losing, then you've of course got a great system that you just fade. But it seems to me that most traders will start messing with trades, taking bigger stops, not taking full profits, etc., and this type of activity is I imagine even more pronounced the more time you have to think about a trade. So in many ways, I think day trading allows a trader to get used to working in the correct frame of mind.