Common Stock Market Blunders That Are Costing You Thousands
Simple Stock Trading Pitfalls Everyone Can Avoid
You study a stock for months, finally decide to buy and the day after you buy, the stock plunges? Or, the moment after you decide to sell, that stock that you've been patiently holding for years, skyrockets? If you feel like your destined to never make money in the stock market, stop and see if you're making some of these common stock trading blunders. These simple ideas may be keeping you from doubling or even tripling your money.
I've made some costly mistakes before I began turning my portfolio around. Here are some basic ideas that can save you cash.
1. Don't Listen to Analysts.
Don't listen to the experts. Most "experts" underperform the market. I'm always amazed when I see a twenty-five year old analyst on TV. Really? They have made thousands trading stocks? How could any young person have the experience to see the cycles and dips of the market. Great inventing is like anything else, it takes time to learn. That's not to say that there aren't some great investment strategies, but take everything with a grain of salt, including this article.
2. Decide On an Investment Strategy Before You Buy, Write It Down and Never Waver From It!
You are smart. Write down a list of your own personal stock trading rules and stick to them. Don't let the fear in the market make your decisions for you. Make a plan and execute it!
Here is my personal list:
- Never buy when they market is up! The price will always go down.
- Never buy on a Friday.
- Never sell when the stock market goes down. Hold or buy.
- Only buy stocks that pay dividends.
- Only buy stocks that you understand.
I know this list seems simple, but money has a funny way of clouding the brain. Without a plan, panic sets in. Think of your plan as a firedrill, prepare for all scenarios and stick with it.
3. Confidence Makes Money. Buy What You Know
The most money I ever made in the stock market came from a product called Fiber Choice. At the time I bought the stock, I was suffering from Irritible Bowel Syndrome, also called IBS. The only way to control it was to take more fiber. Fiber Choice saved my life. It was tasty and easy to use. I loved it. I looked at the package and found out that I could buy shares in the stock.
I bought them the next day.
The stock went down, but I didn't care. I loved this product so much, I was confident it had to make money. I knew that anyone who had to take a fiber supplement would instantly buy Fiber Choice. There was simply no other product like it. As the stock went down, I kept buying. I had the confidence to wait. Eventually, a big pharma company bought Fiber Choice. I cashed in making ten times my initial purchase price.
If you don't understand the stock you are buying, you shouldn't buy it.
4. Invest. Don't Gamble.
If you are looking to get rich quick, you are going to lose money, but if you can hold for the long term and buy quality companies, you'll make money.