| August 19
Mistakes committed by traders while trading in derivatives
Committing mistakes is a part
of the learning process when it comes to trading or investing. Investors are majorly involved in holdings for a longer duration
and they will trade in stocks, exchange traded funds, and other securities. Traders generally buy
and sell futures and options, hold those positions for shorter periods, and are
involved in a greater number of transactions.
mistakes is a part of learning process when it comes to investing or trading.
trading India investors are typically involved in buying and
selling of future options and holding positions for a shorter period of
time. The following are some of the,
mistakes that are committed by traders while trading in derivatives
No trading Plan - If one has to practice derivative trading in India, then the
trader or investor should have a well-defined trading plan which should talk
about the goals and the objective of the trading or investment. An investor
with a defined trading plan would know their entry as well their exit points in
the market. On the other hand beginner trader may or may not have a trading
plan and if they have one they may be more prone to stray from the defined plan
than would seasoned traders.
Ignoring Risk - In the field of trading one
should not never forget the capacity to bear risk. Some investors can cope up
with highly volatile market while others can, in this case the investor should
exit the market timely so that he doesn’t have to bear extra normal losses.
Not Using STOP-LOSS – A big indicator that you
don’t have trading plan is that you don’t use STOP-LOSS in your trade orders.
Stop Loss orders are executed automatically once perimeters you set are met.Tight stop losses generally mean that losses are minimised
before they become large or sizeable. Stop loss helps one to minimize the risk and helps
to avoid extra losses and keeps the position of the investor intact.
by taking care of the above few points investors can avoid these common
mistakes and can have a successful trading strategy