Making mistakes is part of how to trade and invest. Investors are typically involved in long-term holdings and will trade stocks, exchange-traded funds (ETFs), and other securities. Traders, on the other hand, generally buy and sell futures and options, hold those positions for shorter periods, and are involved in a greater number of transactions.
While investors and traders use two different types of trading transactions, they often are guilty of making the same types of mistakes. Some mistakes are more harmful to the investor, and others cause more harm to the trader. Both would do well to remember these common blunders and try to avoid them.
Key Takeaways
Mistakes are common for experienced traders and new investors.
Make sure you have a trading plan, stop chasing performance, and rebalance your portfolio often.
Don't ignore risk aversion, your time horizon, and stop-loss orders.
Stop letting your losses grow, adding to your losing positions, and accept your losses.
Don't buy into the hype, diversify your portfolio, and leave day trading to the experts.