Here are 10 most common, but fatal mistakes that we all tend to make while trading in stocks. These should be avoided if we don’t want to pay through our nose. Browse through the list and be alarmed at the ones you have been committing or do not know about:

1. It’s no party out there
Trading in stocks is a serious business. It is not something that you do merely for fun. If you are looking for excitement, thrill and fun, then a casino is the right place for you. Stock market is not a game of roulette or poker that you bet your money in and wait for the wheel of fortune to stop at your number. And just in case it doesn’t, you groan and try to recover your losses as fast as you can thereby losing even more money. While it is a human tendency to crave for what one has lost, it is not the right strategy at the stock exchange. The mantrais not to panic, be calm and patient and wait for the next big opportunity. Do not do anything in a hurry.

2. Ego: It should not exist in your trading dictionary
While you may be successful almost always in everything you may venture upon, there’s no guarantee that you are bound to fare well even in stock trading. The opposite also holds true — someone who may have failed in most of the things may spring a surprise when it comes to stocks. So, ego should not be a word in your trading dictionary. If you have an ego big enough to think that you know all and can quadruple your money in a day without any professional help, we wish you all the luck in the world. If you cannot accept that what you are trading in is wrong and take eons to exit the bad trades you are entangled in, your portfolio is bound to touch the nadir in value terms. Whoever you may be and wherever you may have come from — be it Harvard or Stanford — it does not matter at the stock exchange. All the degrees and diplomas, professional achievements, etc that one may have do not matter when it comes to stock exchange. 

3. Four-letter words are a big no
Hope, wish, fear, pray — you are not in a temple to hope, wish and pray and neither have you been shoved into a crusher that you fear of something unthinkable. These four-letter words spell doom for you. Please keep away from them. Markets have their very own system of moving up and down. No matter how much you hope, wish, fear or pray they will behave as they have to. A losing trade will not turn into a winning one as an answer to all your hopes, wishes and prayers. When you are wrong, just add another word to your vocabulary — get out (of the losing trades that you are in).

4. Money not meant for trading, is not meant for losing
If you happen to be an inveterate gambler, we have no advice to give. However, if you are not, please do not trade with the money you cannot afford to lose. You should not use money from an existing business, college or school fee, or for that matter money borrowed from someone. If you know that the money you have invested in stocks is not meant for it and there’s a risk involved, you may trade out of fear and emotion and will not apply logic. If by any chance, you are in the aforementioned situation, we strongly recommend that you stop trading until you have earned enough to set aside a corpus or account that you can truly afford to risk without any major financial setbacks.

5. Trading Plan: What on earth is that? 
Money does not come by itself. One has to earn it through a well-devised plan and by its successful execution. If you are a trader, ask yourself these questions:
- Do I have a set of rules that tell me what to buy, when to buy and how much to buy, not just for the next trade, but also for the next 10 trades?
- Before I enter a trade, do I know when I will take profits out of it? Do I know when I will get out if I am wrong?
These questions form the first part of a trading plan. You cannot be successful if you cannot answer these questions clearly and concisely. 

6. Do not count your chickens before they hatch
Of course, it is wonderful feeling to see your trade do well. However, the success mantrais to hold your horses, for the highly euphoric state that you are in may lead to daydreaming and expectations. In euphoria, you may lose track of your situation. Just because you have convinced yourself of an eventual positive outcome, there is a chance that you may deny yourself the reality. The simple formula is to know exactly where and how you will reap profits once you enter the trade and implement the strategy no matter how profitable the stock may be at that point in time.

7. Oh, this is beyond me now!
One of the most common mistakes that we tend to make is to let things go out of our hands and out of our control. One often tends to let the losses grow too large. Though no one likes to take a loss, taking a small one in time circumvents situations wherein one is forced to take in large losses later. If you think great traders never lose, you are wrong. They may have lost, but they have an uncanny ability to recover quickly from a string of losses, bounce back at the next available opportunity and exit profitably. Every trader needs to develop a mechanism for getting out of bad trades quickly. One needs to research and learn to apply the best methods for placing protective ‘stop loss’ orders. The blueprint for success in situations, where one has to recover from many small losing trades, is to ensure that the winning trades are much larger so that they not just compensate for the loss but also post profits at the end of the day. The normal human psychology is that having faced a series of losses, big or small, one loses hold of the winning trade as well. One should not get affected by such fear psychosis and should give ample time and room to profitable trades. 

8. Do not change your strategy unnecessarily
Have faith in your trading plan or strategy. It is normal for markets to go high and low. Do not get perturbed easily and change strategy during the day while the markets are still open. It is human for all of us to react, become emotional and express fear or greed. Barring some very visible signs that warrant change, the key lies in planning the trading strategy before the market opens and adhering to it religiously irrespective of crests and troughs. 

9. I should have got out of it earlier
Escape plan is an important part of the trading plan. It’s surprising that most traders do not have a clear exit plan and are unable to get out of a bad trade. They resort to the hope, wish and pray method. They need to be told that markets behave as they have to and one has to accept his/her fault. The easiest way to keep a bad trade from turning into a real bad one is to fix a limit before you get in. You should not hesitate to get out if things do not work in your favour.

10. It pays to flirt; falling in love is a sin
While trading in stocks, there should be no favourites. Getting fascinated and falling in love with a stock or two is a sin here. If you constantly trade in your favourite stocks and ignore other profitable trade opportunities, you are committing a mistake. Just flirt with stocks — attachments are a big no because such tendencies can be suicidal in terms of trading. It may be detrimental for your financial health.

 
Follow this advice, avoid mistakes and become a master trader.