Equity trading can be appealing to new investors because it feels like the fastest and easiest way to grow money.
The idea of buying a stock today and selling it for a profit next week sounds simple enough.
For example
You might buy a stock at AED 50 and sell it at AED 60 a week later for a quick 20% profit.
Sounds simple, right?
That is what draws many beginners in.
But markets do not always move as per your expectations. The same stock can fall to AED 40 just as easily.
Here is the truth – Equity trading needs proper knowledge and preparation.
And common mistakes such as following market noise or reacting on emotion can quickly lead to big losses. So in this blog, we will look at five common mistakes new equity traders make and the best ways to avoid them.
What is equity trading and how does it work?
Equity trading is the process of buying and selling shares of companies to earn profit from price changes that happen every minute in the stock market.
The working mechanism is simple – you make money when the price goes up and lose when it drops.
There are two possible outcomes in equity trading:
- The company performs well and the share price rises. The value of your investment increases and you earn a profit when you sell.
- The company performs poorly and the share price falls. This reduces the value of your investment and can result in a loss.
Did you know?
Most people trade through mobile apps and online platforms that show live prices changing every second.
Some platforms like Standard Chartered, also offer real-time equity trading tools and data-driven market insights to help you make better investment decisions.
5 common mistakes new equity traders make and how to avoid them
Every new trader makes mistakes in the beginning. The goal is not to avoid them completely but to understand what causes them and how to trade smarter.
Mistake 1. Trading without a clear plan
Most beginners start trading without any structure. They buy a stock because someone mentioned it or because the price looks attractive. Then, when the market moves the other way, they panic and sell. This cycle repeats until they lose confidence and money.
A trading plan keeps you from acting on impulse. It works like a map and defines these important things –
- What you will trade
- How much you will invest
- What level of risk you can take
- When to exit the market for profit and for loss
Example
You have AED 5000 to trade and you might risk only 2% per trade
That is AED 100
So, you set a stop-loss at that point, so one wrong move doesn’t erase your capital. This approach teaches patience and discipline.
Here are some additional tips you can follow
- Start with a simple plan
- Use a trading journal
- Define your budget and profit target
- Plan your risk-reward ratio
- Use stop-loss before entering any trade
- Stick to your rules even when markets fluctuate
Mistake 2. Letting emotions control your trades
Every new trader feels emotions while trading. You get excited when the market goes up and become afraid when prices fall. The problem starts when these feelings control your decisions instead of logic. It often leads to poor timing and unnecessary trade losses that could have been avoided.
Emotional trading usually starts with overconfidence or panic. After one lucky win, a trader may increase the next trade size, and after a loss, they may rush to recover it. Both actions lead to poor choices.
Example
You buy a stock at AED 100
It rises to AED 105
But instead of taking profit you wait for more
The next day it drops to AED 95 and you sell it in fear
Use these tips to manage emotions
- Set clear entry and exit points before every trade
- Never risk more than you can afford to lose
- Avoid checking prices every few minutes
- Review your mistakes weekly to understand your emotional triggers
- Take a break after a big win or a loss
Mistake 3. Ignoring research and fundamentals
Another common mistake in entering the market without studying the companies you plan to invest in. Traders often use information from social media or take advice from friends when investing in equity funds. This approach may work once or twice by luck, but it often leads to losses in the long run.
Example
You buy shares of a technology company because everyone is talking about it.
The price rises for a few days and then drops sharply after the company announces poor earnings.
If you had read the company’s report earlier – you would have known that their profits were already falling and avoided the trade.
Here are some tips to trade with proper research
- Read the company’s financial reports before buying shares
- Understand the industry and its growth potential
- Follow quarterly earnings and important announcements
- Check if the company has strong management and consistent revenue
- Use reliable sources for information
- Study both technical charts and company fundamentals
Mistake 4. Overtrading and chasing quick profits
One common myth about trading is that more trades mean more profit. This is not true. Overtrading actually increases costs and stress. And this is a recipe for disaster because the more you trade without reason – the faster you lose your capital.
Remember, overtrading often starts with excitement or fear of missing out. When you see prices increasing, you naturally feel the urge to act and do something. But not every market move needs a response.
Example
You have AED 5000 in your account and make ten small trades in one day.
If each trade costs you AED 5 in fees – that is AED 50 gone without counting losses.
Over time, these small costs and bad entries add up.
Follow these tips to avoid overtrading
- Trade only when you have a clear reason or setup
- Do not trade just because the market is active
- Set a maximum number of trades per day or week
- Review your trades to see if they fit your plan
- Focus on quality trades, not quantity
Mistake 5. Ignoring risk management
The first rule of trading is risk management. It is the foundation of trading, yet most beginners overlook it. They focus only on profits and forget how quickly losses can grow. To become a good trader – you must protect your capital first and think of profits second. Risk management is something that helps you stay in the market long enough to learn and improve.
Example
You invest AED 2000 in a trade expecting a 10% gain
Instead, the stock falls 20%
Without a stop-loss, your loss is AED 400
If you had set a 5% stop-loss, you would have lost only AED 100 and still had funds to trade again.
Here are some tips to manage risk
- Never risk more than 1–2% of your total capital on one trade
- Always use a stop-loss order to limit potential losses
- Avoid putting all your money in one stock or sector
- Keep some cash reserved for unexpected opportunities
Conclusion – Trade smarter with the right tools
Equity trading can open great opportunities if you approach it with patience and discipline. And the first thing you must do is choose the right platform, especially if you are trading online. A good platform can make buying and selling equity shares easier.
With Standard Chartered Online Equity Trading, you can now access 10 global stock exchanges with low brokerage fees and professional trading tools – all in one secure app.
You can even earn up to USD 500 in cash rewards for qualifying trades. Start trading smarter today with live market data and complete control right from your mobile.
