One very Important mistake to avoid in stock market.

Different traders follow different stock market trade strategies. Some of them however inevitably fall into a losers' pit they find hard to get out of. This is because they make the same crucial mistake. If you want to earn more than you lose, you need to make sure you can recognize this mistake and avoid it.

The common error that many traders commit is putting too much individual value on entry indicators. They think that it's possible to find that one indicator that will lead to a perfect entry. In their thoughts, this is what will help them get into a trade just when an upward trend is beginning. This same indicator is supposed to tell them just when to make the perfect exit too.

The brutal truth is that, there is no perfect trade entry indicator. Those who believe that there is put themselves closer to suffering losses. Deep inside, many of these traders who pour a lot of time over searching for this golden indicator know that there isn't one. Why then do they continue making a fruitless search? It is a psychological factor that ultimately pushes them to make the mistake. Calling the shots at the beginning of a trade makes them feel that they are in control. This feeling extends well beyond the starting point.

In reality, you may sometimes be able to hit on a good entrance. It is however incorrect to believe that you will always retain control from the start to the end of a stock market trade. There is no way on earth that you will be able to predict how a trade will turn out. The market will behave independent of what you think or feel.

Of course, planning where and when to enter a trade is an important part of any trading system. It is not however, the most important element of all. Ultimately, it is not your grand entrance that will determine how much you will earn. What will secure your profits are your exit and your money management rules.

When taken as a whole, entry, exit and money management all make up your system. In some expert circles, your points of entrance and exit are taken under the context of the much greater concern of cash management.

This term may sound a bit technical for stock market trade beginners. It is however, a lot simpler to understand than you think. The other more definitive term for it is risk management. As the term implies, this is a set of rules or guidelines that will set the risk level that you are most at ease with. With such guiding points in place, you are able to maximize your profit potential without losing more than what you are willing to let go of.


There are several points that should be covered by your management plan. Some traders tend to think that risk management is all about determining how much money one is willing to lose. A good plan however also takes into consideration such aspects as ideal trading float, initial stops and trade size.

In summary, you shouldn't put too much effort into looking for the perfect trade entry. Although this factor is important, you should put more effort into creating a sensible risk management plan. This is the best way to make sure you will often be happy with the trades that you perform.