Stock trading comes with risks, and online stock trading is no exception. If anything, it makes it even easier to make careless mistakes. In the world of trading, carelessness can be costly, so it’s better to do all you can to prevent it. Use online trading apps with caution and make the best of the risk-prevention options they give you to protect your assets.
Letting Losses Run Loose
One of the first things you should start using on your online trading app is stop-loss. Use this tool to prevent the losses from growing out of proportion. The platform will automatically sell the stocks in case their price falls to the certain point you set using the stop-loss. Thus, you won’t have to worry and constantly monitor the stock market.
Failing to Set a Profit Price
Preventing the loss is not the only thing you have to think of. You also have to know when to sell to maximize the profit. Ideally, that would be while the stock’s price is going up and before it starts falling.
While you cannot guess when that will happen, you can limit the risk and automate the process by setting the lowest profit price you are willing to accept. When the stocks rise to that level, the app will automatically sell them.
Following the Hype
The worst time for buying the stock is when everyone is talking about it and the company is all over the news. This means you are already too late since the price has gone up. Buying stocks makes little sense when the price is on a rapid upward trend. What you want to do is buy before that happens, and then sell during the hype.
Having No Goal
You have to be clear about your objectives to know how to achieve them. You can only ask yourself how do I trade and develop a strategy based on your goals. It’s one thing, for instance, if you are doing this short-term in hope of turning a profit fast, and completely another if you are planning on investing for decades with the goal of a comfortable retirement.
Trading Without a Strategy
You need to build a strategy based on your goals and understanding of the market. Don’t buy stocks without having some knowledge of the companies whose shares you are buying. Think ahead and prepare for the turbulent times. Now and then, a period of instability will come, so take precautions and diversify your portfolio wisely. This will help you minimize potential losses.
As a trader, protecting your assets should be a top priority. Don’t forget to set up loss-prevention options in your trading app. How you are going to approach the market and what kind of trading strategy you will choose, however, will depend on your goals. You can choose to risk more in hope of faster gains, or play it safe and build your wealth over decades. Whichever way you choose, make sure to minimize the risk.