On the surface, trading seems so simple. A price moves up or down, so you just need to pick the right direction. Well, not quite. If trading was so simple and straightforward, everyone would be investing in stocks. However, that does not mean you can’t win big. You can readily find people who are living a luxurious life due to trading. It especially stands true for those who are well-versed with Elliott wave theory’s basics.

Most people keep up with financial losses because they indulge in the common trading mistakes mentioned below:

Lack Of Preparation

Stock trading is not a job that can be learned in school. You must be disciplined in order to trade successfully. To earn high returns, you must create a watchlist and keep track of it at all times. You should also allocate your money in different stocks in order to make a systematic allocation. Although it is a tedious task, you will soon become accustomed to the routine. Better still, if you make Elliott Wave trading part of your preparation. The stock market is risky if you're looking for quick income.

Every trade should be considered, planned, and analyzed carefully. It is essential that investors do a thorough statistical and fundamental analysis of every trade, rather than relying on emotions and intuition.

Doing Too Much Trading Too Quickly

Trading can be lucrative and traders are tempted to make more money by pushing the limits to increase their profits. Practically speaking, exercising too much enthusiasm in trades only increases your risk. If you go too far and things don't work out, you could be kicked out of the market before you settle in. Many people believe that trading will turn them millionaires overnight, which can’t get any further from reality. Trading is not something you can just throw in some money and expect to reap the rewards. It takes patience to reach those lofty heights.

Relying On Guesswork

Trading without understanding the market is like going to a casino and throwing money at the roulette table and hoping for the best. Trading is unpredictable and volatile, but if you spend time studying Elliott wave basics and watching how the markets work, you will be able to determine the best trades for you.

Not Taking Time Horizon Into Account

Do not invest without bearing a time frame in your mind. Before you invest, think about when you will actually need the money. You should also consider how long you have to save for retirement, a down payment for a house, or college education for your children.

Emotional Trading

You know that feeling you get when you are on a winning streak. This is the time when you feel like you can't go wrong at all. Subscribing to such a feeling could prove to be catastrophic in trading. Remember, all good runs end.

By any stretch of the imagination, we are not advocating that you should stop being confident. However, emotions shouldn't dictate your trading behavior and force you into situations you wouldn't normally choose. So take a moment to reflect on the situation and tap into Elliott wave trading theory’s fundamentals before you rush into a trade. Successful traders make it a point to create a system that protects them from getting hijacked by emotions.

Letting Losses Grow

Seasoned traders and investors move to the next trade idea if the current one does not work. That’s not how novice traders operate. They do not take immediate action to stop a loss. As a result, they keep losing their position in hopes that things will eventually get better. If you are new to trading, we would recommend you make a prompt decision as soon as a trade starts to decline. So much so, you can even anticipate the decline with the help of the Elliott wave cycle.

Leveraging Revenge Trading

Nobody likes to lose. More so, if you happen to lose something as valuable as your hard-earned cash. The best thing to do regarding revenge trading is to not get involved at all. It is better to look back at what went wrong and try to get weak links out of the system. One of the best ways to improve yourself is to spice up your knowledge about Elliott wave trading theory.

Author's Bio: 

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