Common Trading Mistakes # 2

It is human nature to get the best in life. This nature is also reflected when one is trading as one wants to buy at the lowest price and sell at the highest price and this leads to the syndrome of buying when the trend is against the stock and they are trying to catch a falling knife. This results in trying to average in a stock for which chips are down and thus instead of traders they become investors as they try to book their losses in paper only. This way they are at mentally peace with themselves as they feel that they have not booked losses. To overcome this problem they get into the element of Hope which further compounds the problem for them as market has the nature of causing maximum pain to maximum people.

Now comes the question how to avoid this mistake?
 
The simple answer to this problem is to accept the fact that none in the world has ever been able to catch the top or bottom in a market and one has to trade as per the prevalent trend in the market. As a thumb rule one can initiate a trade a little late instead of trying to predict the bottom, entering early and getting stuck!

Now comes the query that is it possible to identify the bottom and a possible trend reversal.
Well it can be done with the help of intraday tips as one gets into the hot stocks of the day and get out with the profit for the day.