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The best Stock Market advice you will ever read is to learn from mistakes when someone else has made them. So, this stock market advice list I made a list of some of the most common trading mistakes that are made. Even I’ve made some of these. If you have already made some of the mistakes, you can rest assured that you aren’t alone in making them. If you haven’t made them, then here’s a way to get around having to learn by making the mistakes yourself, by reading my stock market advice list.

The Stock Market advice tip #1, and worst mistake that people make is that they believe trading is the easy answer, a way to get rich quickly. People will often expect to become wizards in the market overnight, but they fail to realize that trading is like any profession; you must learn how to do it first.

For example, would you attend a weekend doctor’s seminar and expect to conduct heart surgery on Monday? Of course not! I am shocked at what people expect when they go to a weekend trading seminar. They think they will create wealth without having to work, invest or think, and it just doesn’t happen that way.

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The Detriment of Emotions

Too often our detrimental emotions get the best of us, and have serious and direct impacts upon our trading strategies. This feature takes a look at how the investors just wanting a little more often wind up getting a lot less.

For example, holding a stock that makes you lose sleep at night can often cause you to make irrational trading decisions. Trying to get one big score may make you pass on taking a respectable gain when it is available to you.

By taking the emotion out of investing, your odds of profiting are far greater, while your chances of making impulse or irrational decisions are significantly reduced.

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Allan taught me much about penny stock investing over the many years I knew him before his early death in 2003. I’ve felt his advice was so helpful that I wanted to immortalize his words in an article.

Kirk, in hind sight, every price that excited me where I held out for more was a wasted selling opportunity. If you are excited, it’s toppy! Penny stock Mentality So what type of investor trawls penny stocks?

1. He’s willing to buy a 9¢ stock that’s 9¢ because nobody else wants it.

2. He’s willing to wake up in the morning and find his 9¢ stock now 4¢, or his 50¢ stock now 28¢ and still enjoy his breakfast profusely, because he knows he’s picked a winner.

3. He’s willing to average down from 50¢ to 9¢ and will buy heavily at 9¢ so the great majority of his stock is purchased at the cheaper level. Hey, he believes in the stock. Of course, the stock slips from 9¢ to 6¢ but that is of little consequence–he knows he\’s gotten in near the bottom and nobody hits the exact bottom anyway.

4. He loves his penny stock, but when he has a double, he sells half no matter what. And he’s invariably happy in the end by his tactic.

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If you are experiencing a run of wins, don’t get getting carried away in the flush of success. You don’t want to give it all back.

Over Trading is the greatest single cause for losses in the markets. Whether you are winning now or losing now, ninety-five or more percent of all traders trade too often.

Even a daytrader trading a five minute chart has no need to trade every day nor to trade all day long. You should be filtering your trades so that you take only the best of the best.

Overtrading was a problem that took me a long time to overcome because I did not know what I was looking for. Overtrading is a very serious problem, and veteran traders learn to avoid it. In fact, one way to know if a trader is a mature professional is to know if that trader conquered the problem of overtrading.

The biggest problem with overtrading is that you don’t even know you’re doing it. You can overtrade by trading too many contracts (too much size), trading too often, attempting too many positions or sitting and staring at the screen all day.

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Many people think that trading is similar to gambling. Is this really the case?

For example, let’s take a look at Black Jack. If you start with $10,000 gambling capital, placing bets of $100 per hand and play 100 hands per day, how long will you last? In the game of Black Jack, with Las Vegas Strip rules, a casino has a built-in advantage of 1.5% over the player in the long run. That means that on average, a player will lose $1.5 per any $100 he bets with. After 100 hands, on average he’ll be down $150. Starting with a capital of $10,000 a player would last about 67 gambling days. That is very similar to the previously described trading scenario. In such case I would choose gambling because at least I would be losing my money in a more pleasant environment.

I chose Black Jack for our example because it is the only casino game in which it is possible for a skilled player to increase his odds to such extent as to be able to beat the House in the long run. A skilled counter can obtain advantage of up to 1.5% per hand over the House in the long run. That means that such a player playing 100 hands per day and average hand being $100 could double his gambling capital of $10,000 in less than 50 days. Similar odds apply to trading stocks, with more potential for profit and less chances for being kicked out of a casino. In order to make it work for you, we’ll need to get the odds on your side. Now lets look at how we can extract as much profits from our trades as possible.

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