Buy when the price is low and sell when its high- it is this cliché that has made thousands of people invest in the stock market with high expectations, only disappoint them later with heaps of financial losses. While equity trading is no rocket-science, it is not very easy either. A lot goes into it to make the best possible decisions and tame the high market volatility for optimum return.
No wonder without the top equity trading companies by their side to help them make the right decisions, so many new investors make the regular mistakes time and again. Here are 5 equity trading blunders that new investors almost always make-
1. Diving straight to day trading- Day trading is not for anyone and everyone. Many investors lose hundreds of thousands of dollars everyday. Unless with an impeccable strategy and market understanding, it is much like a gamble where there’s a wide chance that investors would spend much beyond their original budget and end up broke.
2. Short term vision- “I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for five years.” That’s what great Warren Buffet once said. His vision was long-term and that is what helped him make billions from his investment in the coming years. Entering the stock market with short-term vision is never a good idea and includes loads of risks.
3. Believing in the rumors- One of the most important things that distinguish the good investors from the beginners is that they know what to believe and what not to. Stock market is full of rumors, often created by group of people for their own profit sake. These “hot news” are hardly true and must be overlooked. Distinguishing between these bluffs and truth is a technique that new investors don’t know but must learn.
4. No portfolio diversification- Not diversifying the investment is the biggest mistake. Even though recommended by nearly every sane investor, many first time traders, running after day trading, overlook this basic sort-of-success-rule. They put all their money in one company or niche and bear the higher risk of loss than the ones who spread out their investment.
5. Unrealistic expectations- Many new investors have some over-the-top expectations from the stock market that do no good but to disappoint them exceptionally later on. Equity trading is not a quick-money scheme. George Soros didn’t make millions right after his first few trades. He lost a large amount of money, it took time and a great deal of patience.
These are the 5 very common mistakes nearly every first time equity trader makes that eventually reward them with initial losses. If really a novice with no market knowledge whatsoever, it is always recommended for people to hire financial services.