Stock Trading

Stock Trading Tips - How to Avoid Under Trading Stocks

Under Trading Stocks

Under trading usually occurs after you’ve been through an episode of over trading stocks. Once you’ve seen the end results of over trading, the fear factor of accumulating more losses sets in and you become afraid to execute your next trade.

The best thing to do when you’re afraid to trade is to not trade with real money. To this day, when I over trade and end the day or week with a loss and the “under trade” factor takes over, I paper trade until I build my confidence back up.

Paper Trading

Paper trading is just a fancy term for practice trading. Whether you’re accumulating losses by over trading or missing winning trades by under trading, paper trading is something that needs to be part of your trading arsenal.

The best way to paper trade is by going about your trading activity like you’re trading with real money. Many online brokers offer simulator platforms that are identical to their real money trading platforms.

If you don’t have access to a simulated trading platform account then it’s best to use a pen and a notepad. Simply write down your list of potential trades, along with your entry price and follow the results.

Stock Trading Confidence

If your end results from paper trading show a consistent profit and you feel like you’re regaining you confidence, it’s time to go back to placing a real money trade.

After I’ve been through a session of paper trading, my first few real money trades are ones where the share amount I purchase is smaller than normal and my exit strategy is different.

Now my main concern is building confidence and locking in some profit, so I might exit a trade with a smaller profit and exit with a smaller loss if the trade goes against me.

Keeping your confidence level high is a must if you want to remain a consistent and profitable trader.

Written by Ben · Filed Under Undertrading, stock trading, trading mistakes >Comments (0)