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Saturday, May 28, 2005

Classic Trading Mistakes (from The Big Picture)

Barry Ritholtz at The Big Picture has a nice summary list of Classic Trading Mistakes :

-- Letting small losses turn into large losses.
-- Refusing to take a loss at all.
-- Overbetting.
-- Bottom fishing/Catching falling knives.
-- Averaging down.
-- Shorting bulls and buying bears.
-- Confusing the company with its stock.
-- Falling in love with a "story."
-- Following the leader.
-- Buying IPOs.
-- Finding the Holy Grail.
-- Overtrading.
-- Excessive tape watching.
-- Being undercapitalized.
-- Letting the tax tail wag the stock dog.
-- Relying on gurus.
-- Thinking this market stuff is easy.
-- Thinking rather than looking.

My personal favorite (for a turn of a phrase), is "catching falling knives".

For a fuller explanation of the items on the list, go to the original piece that the summary came from at Decision Point.

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