The first common mistake...
The first common mistake of individual traders is that they buy stock after a rise in price at levels where institutions are selling. Would you do this in a store? Would you look at a product and wait for it to rise in price before you bought it? The answer is obviously no.
The second mistake of individual traders is that they sell stock after a large drop in price at levels where institutions are buying. When the pain of loss gets too great and hope is lost, traders exit trades for losses they never expected.
The third mistake of individual traders is they have no plan as to how much capital to risk on a trading opportunity. Traders buy stock because they believe it will increase in price. However, most traders will not define a price that when they are wrong and the stock drops, they will exit. One principle of risk management is to never risk more than you can afford to lose. We will expand on this thought in the article, “How Do I Manage Risk?”
The fourth mistake of individual traders is that they have no plan as to where they will take profit from a successful trade. Greed is a killer. A trader may have a thought as to where to take profit, but once a stock reaches that price traders tend to let it ride just a little higher. FOMO or Fear of missing out on more gain turns winning trades into losing trades.
Now we have already addressed the reason behind the first three mistakes in the article on why 97% of traders lose money but the principle is worth repeating.