There are many beginner mistakes that investor are likely to make when they first enter the stock markets. Most of them are caused by general lack of knowledge on either trading/investing in general, or the company they are investing in.
Let's look at some of the biggest mistakes novice stock investors are doomed to make at one point of their career.
- Not doing enough research -> This includes both companies one invests in and trading/investing techniques in general. TIP: read as much books and gather as much information on the subject as you can. A good book to start with is The Intelligent Investor by Benjamin Graham
- Gambling your money -> Some investors will, almost blindly throw their money at a stock and monitor its movements. Imo, you are better off horse betting, or going to a casino. You are going to lose your money anyway, so why not have some fun and check out the cute chicks at the casino, right?
- Having no plan -> The single worst mistake a beginner investor will probably make. TIP: Set goals, asses the risks involved, see how to minimize them, make goals for your portfolio growth, diversify your investment.
- Expecting wonders -> in a short time frame -> Your portfolio won't grow by 300% in a month. Set yourself some realistic expectations and don't expect to get rich quick. Success never happens like that. It requires a great deal of time, effort and correct decisions to be able to achieve it.
- Relying on speculation instead of information
- Having excessive leverage
- Doing what everyone else is -> Don't follow the herd. Do your own research and make your own decisions.
- Relying on Stock tips -> to help you make decisions
- Buying in the hype -> When the prices are high it's a time to SELL, not to BUY!
- Investing money -> you can't afford to invest