Why You Couldn’t Make Money from Stock Market

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,

  1. 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%.

  1. 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!

  1. 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.

  1. 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?

  1. 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!

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