You are at right place if you want to know the common 10 mistake why investor loose money. It's obvious we make mistakes but most important thing is to learn from that mistakes & grow.
A wise person said "Learn from the mistakes of others. You can't live enough to make them all yourself".
Here we go...............
1. You miss out or mismanage Money
Managing money is a difficult skill for most people, but its one of the most important skill to have. In end, its not how much you make but how much you keep that matters. The secret to making money in stock market or with any investment:- "Don't Lose Money"
2. You aren't prepared for the worst.
Before you get into the market, you should be prepared for the worst not scared. Although you should always hope for the best, you must be prepared for the worst. "Greed is more powerful than fear"
3. You follow the Crowd.
If you study the lives of some of greatest traders and investors in the recent past, you will find that they often made their fortunes by doing the opposites of what crowd was doing.
4. You Listen to or get tips from wrong people.
There are some steps you can take to limit your risks. First, you should never act on a tip before doing fundamental or technical research. One look at a stock chart should give you a good idea as to whether the stock is a a loser.
5. You Don't Learn from your mistakes.
Most experienced investors and traders know that you learn more from losers than from winner. It is worth losing a little money in the market today to protect you from losing a fortune tomorrow. Take time to understand your mistake. In the market everything does'nt always workout in end. Accept the loss and make sure you don't make the same mistake again.
Next closely review your investment strategy. You should study the entire market environment & analyse each of stock you are holding. If your investments don't hold up based on technical & fundamental analysis, you might want to make changes in your portfolio.
6. You are unable to be both disciplined & flexible.
Almost every professional investor will rightly claim that a lack of discipline is the main reason that most people lose money in the market. If you are disciplined, you have a strategy a plan, and a set of rules, and no matter what you are feeling, you stick to your strategy plan and rules.
Discipline means having knowledge to know what to do (easy part) and the will power and courage to actually do it (hard part) It means that you have to stick to your strategy and obey your rules. This always work for successful investor & mutual fund manager.
7. You bet all your money on only one or two stocks.
One of the problems with investing directly in stock market is that most people dont have enough money to maintain a properly diversified portfolio. First you can buy mutual funds, especially Index fund, which allow you to buy the entire market for a fraction of what it would cost if you bought each stock in the index. Second you can hire a certified investment advisor to manage your portfolio & help you to diversify. Third you do your own market study & then invest in it.
8. You get too emotional about your stock picks.
Becoming too emotional about your investments is a clue that you could lose money. Making money should be as boring as waiting in line at supermarket. A common problem, and one that especially afflicts those who have tasted success in the market is overconfidence. In love as in life, there is always hope that thing will work out in end, but in stock market, hope can destroy your portfolio. If the only reason you are holding onto a stock because of hope (and not for fundamental or technical reasons) you are going to lose money.
9. You let your winning stocks turn into lossers.
It seems as if you cant win no matter when you sell a stock for a gain, you are left with the lingering feeling that if you held it a little longer you'd have made more money. If you have a winning stock, you probably think its crazy to get out too early. That's why you might want to adopt an incremental sell approach. For e.g. if your stock rise by more than 30%, sell 30% of your position. By selling a portion of your gains you satisfy the twin emotions of fear & greed.
10. You don't sell your losing stock
This is so important that you should paste it in front of your computer or on your desk. If you lose more than 20-25% of an investment, sell. You lost, so you sell the stock. You can put in a stop loss order at 10 to 15% below the purchase price when you buy the stock, or you can make a make a mental note.
This tips are not mine it is adopted from a book. Hope you enjoyed reading it.
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