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Morning everyone

From what I saw over at Commsec chat, I get the impression that a common mistake some traders make is trying to pick bottoms and tops before they have actually occured....ie...when a stock falls back to a previous support, some will see it as a buy because it had bounced of that support in the past. But there is no guarantee it will again this time. So in affect, traders buying at support without waiting to see if it is likely to rebound are purely punting imo because no matter what anyone tells you no-one can say with 100% certainty that a top or bottom has occured until it has actually passed to some extent.  A similar concept applies when looking to sell in profit.

Depending on one's risk profile and objectives, a safer play would be to accept sacrificing say 1-2% of potential profit by waiting to see if price shows signs of rebounding before buying.  After all, if a share shows signs of rebounding on a chart then the probability of it then continuing to rebound/rally is higher than when it first retested previous support at which time it could easily have continued falling further. 

Another mistake is that some traders/investors do not have a written plan.  I believe a plan should be penned to paper because psychologically I think one is more likely to stick to it and review it periodically or as required if it is written down than just rather being scrambled around in one's head being influenced by circumstances/events driven emotions (fear and greed).

food for thought

cheers

bullmarket