To err is human. Mistakes can happen very often to you while you are investing in stocks. When you lose large sums of money with some teeny tiny mistake, it can affect you in many ways. But understanding the mistakes that you might make while investing can help you and keep you in control of your actions. Here are some of the common errors investors make while trading in stocks:
â— Understand the basics.
One of the most popular mistakes is how many investors don’t understand the basics of marketing. Understanding certain terms and abbreviations are really important as you are involving your money in it. Trading basics, rules, compliances and terminology as market order types including market orders, limit order, stop market orders, stop limit orders, trailing stop loss orders, and other types commonly used by investors, margin money required if you want to trade in F&O and many other terminologies are needed to be understood.
â— Learn to control your emotions
The main emotion that can conquer you while you are earning money is greed. It can mess with you in very many ways. When you are blinded by greed, the number of mistakes you make will increase. Always keep in mind that a slight error from your side can make drastic changes while you invest. Thus, learning to control emotions is important. Be confident and face what is coming to you without fear. Don’t panic and do things in the most calm and relaxed way. Whatever be the outcome, face it fearlessly.
â— Investing too much money at once
It is more convenient to learn the market volatility by investing a small amount of money. It is easier to watch a hundred bucks go up and down in the market than a hundred thousand bucks go up and down. If you feel comfortable with the amount you have invested and feel like you are ready to invest more, then go for it but with caution. Investing a large sum of money all at once, which is probably your hard earned money, can face a lot of downfall too. So it can have permanent consequences.
â— Invest for your future financial status
While you invest a little amount of money, investors tend to invest not enough money to cover your financial status. People tend to invest money just for their present lifestyle without considering inflation and other economical problems. Such people, by the time they reach the age of retirement, they end up being poor and desperate looking at the time they should have invested more. So it is important to invest money not only for the present but also for your retirement.
â— Interest in one company.
Too often, when we see a company we’ve invested in do well, it’s easy to fall in love with it and forget that we bought the stock as an investment. Always remember, you bought this stock to make money. If any of the fundamentals that prompted you to buy into the company change, consider selling the stock