Q. What are the most common mistakes novice traders make? Kalpana Kaul
A. The stock market is a very attractive place to earn a high return on investment, but at the same time, it is very risky too. So, if you are investing for the first time, then you must be very careful. Here’s a list of some common mistakes made by first-time investors:
– Investing all the money in a single stock. Remember, diversification is the key to reduce the risk when you invest in the stock market
– Investing in stock without doing research. Remember, not all shares that trade in the stock market are safe for investment. So, doing your own research can save you from a loss.
– Panicking when the price of stocks falls. Remember, greed and fear drive the stock market. So, panicking can force you to make a wrong decision when the stock market is volatile. Take your decision wisely.
– Being too greedy. Too much of everything is harmful. Being too greedy can put you into loss and you may not get anything in hand at the end of the day
– Following tips of self-proclaimed experts. Always consult a recognized expert if you need advice. Never take advice from a self-proclaimed expert, else you can lose all your money
– Investing more than financial capacity. If the stock prices go down, then you will get into debts and make heavy losses.
– Not booking profit on time. Entry and exit, both are essential for a successful stock investment. If you don’t book profit at the right time, then you may not get the same chance for a long-time
– Indulging in speculation. It can take away all your money in quick time
– Expecting an unrealistic return. You may never get such return and at the end, you could end up losing all your money. Set a realistic goal and book the profit on the right time.