Mistakes are part of life; there are people who would learn from it and some would take their lives to a dump. The same goes with Stock Market. Stock market is hit and trial for those who do not strategise & analyse their work and while doing analysis they tend to make mistakes.
Mistakes happen in stock market all the time not only small, but also big ones. There are times when people become Riches to Rags and also stories from Rags to Riches. Stock market is a strong force which can make you rich in a day and vice-versa. Therefore it is mandatory to analyze and make strategies before entering in Stock Market.
So here are some Mistakes you can avoid while Investing:-
- OVER TRADING
Always engage in the market if you have enough funds. Don’t try to invest when your funds are less than required. Always maintain your portfolio and do some investments. Investment is done for profits and you only gain something when you are patient. So the point goes that don’t over trade. Have control over your emotions because sometimes it happens that the stocks are doing well and you don’t have enough balance in your account. So the best way to go is to wait until you generate funds and then do your investments.
- DON’T TRADE ON HOPE
Any decision based on finance should be strategized not hoped. If you like a stock to be bought, buy it, but only after some market research. There are some people who buy stocks without market research and buy only on hope that it would give benefits. Hope is a very good thing but in the financial sector it is important to keep your emotions in check.
- DON’T GO AGAINST THE TREND
There are two types of trend in the market up trend and down trend.These trends happen within a time frame. This time frame is when the stock market works.
Now when the market is in the upward trend one can always invest to get good profits in any segment.But when the market goes down one should not panic and sell off the stock because market will recover from its lows. So hold your horses and don’t sell off your stocks in losses.
- ALWAYS HAVE A RISK TO REWARD RATIO
If you are an investor, the main thing you have to take care of is your risk to reward ratio. One has to maintain the ratio of 1:2 or 1:3 to get some profits. The ratio of 1:1 is not favourable to anyone. While investing maintaining your Risk to Reward ratio is vital for your kitty.
5.TRADE OR INVEST ACCORDING TO YOUR RISK APPETITE
The portfolio of every person is different. Everyone has their own capacity to invest and digest losses. Always keep a stop loss on downside according to your risk appetite
6.DON’T RELY TOO MUCH ON NEWS AND RUMOURS
Be your own boss. Don’t rely on news or rumours. Maintain your strategies and work accordingly. Don’t let other tell you what to do or not to do. Study the market and have your own opinion.
- HAVE PATIENCE
The main mantra to stock market is to have patience. As market keeps on fluctuating, don’t go paranoid. Keep a track of the stock. It won’t stay down forever.
- NO DIVERSIFICATION
There are people who don’t diversify and work on any stock or every stock they can. The key to success is to divide your portfolio. Divide a certain amount on certain shares and then invest.
- CROWD MENTALITY
It’s a very tricky point. Do not follow the herd mentality do your homework in terms of research and analysis. Do not buy stocks if everyone is buying the same stock. Only if your analysis is right then only go for it. Following the crowd mentality will always leave you to disaster.
- NOT SETTING A STOP LOSS
One of the biggest mistakes traders do while trading in stock market is they never follow the system of stop loss. Trading without stop loss can ruin your portfolio/wealth and can lead you into losses. Always put your stop loss which should follow your risk: reward management.
Submitted August 29, 2017 at 03:50PM by financialnerve http://ift.tt/2iGQapu
No comments:
Post a Comment