Why You Couldn’t Make Money from Stock Market
Very often, you may find yourself, though
already being in stock market for considerable time, you’ve yet to make a
meaningful gain from it. Constant repeating of winning and losing has
brought you nothing in the end.
So, what are the common mistakes one made in investing/trading?
Here are the 5 most common reasons why one couldn’t make money from stock market are as follow,
- Rely on tips
This is very common among retailer investors. Not to say that all
tips are false, but how often will someone share with you an important
info that can make you hundreds of thousand dollars? When we rely on
tips, we become passive in making decision. This may cause us perform
wrong buy and sell. Out of fear of losing the opportunity, we buy high
and got trapped. Also out of fear of getting trapped at high price, we
sell a stock when it only moves 5~10% and miss the rest rally that goes
to 100%.
- Impatience
Remember that the law of nature tells us that it takes time for a
tree to bear fruits. Likewise, in stock market, it takes time for
company to grow and reward shareholders. We shouldn’t expect that after
we buy a stock, that stock will immediately give us a 10%~20% return in 2
weeks to a month. Unfortunately, retailers like us tend to be
impatience. Very often, after we buy stock A, stock B rallies. Then out
of impatience, we switch to stock B hoping to have a quick gain from it.
But when we do so, stock B stops rally and starts going down.
Meanwhile, stock A starts to rally. Out of frustration, we switch back
to stock A again only to find that stock A’s rally has finished. Just
when we do so, stock B rises again. And this vicious cycle keeps
repeating. Put a reminder to ourselves, don’t drop into this trap!
- Focus too much on short term gains
There is a good saying in investing.
It’s better to gain once with huge profit, rather than keep gaining many times with small profit.
Unfortunately, we often focus too much on short term quick gains, not
knowing that putting our capital in a stock that grows steadily is much
better than constantly looking for stocks that rally for short terms.
Practice of this constant stock switching has a higher risk of buying a
wrong stock that can cause us losses.
- Lack of discipline
Discipline is important in stock market. Even after we realize the
importance of don’t rely on tips, be patience and focus on long term
gains, we may not be able to practice them well without discipline. It
is a quality that most retailer investors are lacking of. Consider this,
when you hold tight to a stock that you believe its future prospect
will be very good, its price remains flat. At that time, another few
stocks are rallying and you watch your friends earning handsomely with
your stock in hand remains flat. What will you do? Will you still
believe in your own choice?
- Over confidence
When things get to its extreme, it will never be good. There is a
blind spot for us who think that after learning investing for years, we
have become skillful enough to just follow our own pace. Remember that
the only thing that doesn’t chance is change. Investing strategy and
tactic should be updated constantly to be in sync with market’s
perspective. Try to avoid for being over confidence on our own as the
old Chinese proverb says, “even great people makes mistakes”. When tides
turn, we must get onshore as fast as we can disregard how good a
swimmer we are!
If you are reading this article and wish to avoid repeating the same mistakes again,
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