Top 5 mistakes in Stock Market
This is a guest Article from Manish Chauhan who writes on Jagoinvestor . He writes on Personal Finance and Financial Planning and his aim is to empower Indians on taking informed decision in their financial life .
Lets see in this quick article what are the top mistakes investors do in Stock markets . Once an investor controls these mistakes he can see great improvement in results .
1) Buying on recommendation
Never buy just on recommendation, Do your own study and analysis . When you buy on others recommendation , you will don’t take responsibility on your own if there is any loss , which is dangerous in markets . Hear others but listen to your self . See other things like markets trend , sector view , global markets , future prospects . Once you are fully confident that its a correct trade and you feel comfortable with it … go for it .
2) Being too Greedy
Stock market is just like our life , You need to have satisfaction in your life and stock markets , If you want more and more and more , you might not get anything , in fact you can lose . You put everything you have on the trade like i did .. Because of greed one generally invests more than they could afford to lose . Dont take unwanted and unaffordable risk , You have to see potential losses , not just profits . This is a very common and one of the biggest mistake in stock markets , so big that it will be among the top mistakes investor and traders do . Buying more quantity was not a wrong thing .. it was the intention behind it
3) No profit booking
This is a major mistake . Once there is some profit , one does not take that profit back in anticipation of more and more . One has to be satisfied at one point and take some profits out of it and keep safe , irrespective of whats going to happen tomorrow. Situations changes in markets, one never checks back the news regarding the stocks after they buy it . Every time you get some good profits , it’s a wise idea to at least book some partial profits out of it (Unless you have strong reasons to hold it for long)
4) Having a Big Ego , Not accepting that you can be wrong
“When your boat starts sinking , you don’t pray , just Jump “
Once you are doubtful , surrender to markets wish. See what markets is showing you, not what you wanted to see. Markets are supreme and no one can be above markets. Leave you Ego at your home when you go in front of markets. Markets tell you what’s going to happen , Not vice versa. Accept that you are wrong and made a mistake and move on . Once has to understand the difference between Stop loss and when things have gone beyond their calculations .
Lot of time, prices started falling and once there is a loss, investor feels like there is end to the world . They feel like they are losers to make a wrong decision. this is where one does not understand volatility or have not planned for it before hand. We wait for markets to come back to our levels but it never does and we lose the patience and sell in frustration . one has to wait long enough for markets to show its returns . Obviously if its was that easy to trade in markets everyone would be millionaires .
Fear, Greed, Emotions, Ego, Impatience: These are the elements of Failure in Stock markets. Manage them well and you can do better . These things are still not the most important elements of success in stock markets
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