subject: Why Beginners Are Not Able To Generate Profits Through The Stock Market [print this page] Think about the initial time you acquire your first stock. Did you buy on the advice of a friend or perhaps a broker? Did you do your due diligence to test whether the stock has potential for making money? Did you monitor your stocks carefully to make sure the stock was behaving properly? Did you implement the appropriate sell rules to unload your shares? If you ever (I'm assuming that you are a beginner in the stock markets here) answer these questions honestly, you will be able to find out the explanations why you have not been creating wealth in the stock market.
Most beginners inside the stock market part with their dollars by doing this: they hear about a great money making opportunity of a lifetime, open up a brokerage account when possible to place their money at work. The minute they do that, they may purchase the stock immediately, especially if ever the stock market seems to be going their way. The waiting begins as they'll watch the account and dream about retiring on a island resort some other place with the easy cash they've earned from this profitable "investment opportunity of a lifetime". After some time, the stock eventually starts to tank. "Everything is still ok" they console themselves "Just a bit downside... it is going togo up soon". However, when the stock drops even further and reaches to some extent where the pain is just too great to handle, they can not control themselves and dump whatever stocks they've got, resulting in huge losses they may never be able to recoup. In the meantime, the fund managers and also the market makers are making a lot of money in the markets on the beginners' expense.
To people that follow brokers' recommendations, take note! Do note that their main source of income is to help you to purchase and sell stocks, and never to assist you to make money. Just consider it: the more you purchase and sell shares regardless of the price, the more they are going to earn through the transactions they create on your behalf. The following time your broker tries to sell something to you, ask him/her whether he is also a shareholder and demand to see some proof. I've a personal principle I live by and it is to ask anyone who tries to sell me some type of investment on whether he/she is also invested in it. If not, forget it. Some analysts' recommendations are also meant for financial institutions to unload stocks to retail investors at a better price. Just imagine: An analyst recommends stock XYZ which includes a buy rating a lot of times beginners rush to accumulate shares. Guess who sells it to them? Yes, the sellers would be the mutual funds and financial institutions who will make a tidy profit in the process.
This scenario is a common one and gets rid of the amauteurs who swore to keep away from the stock market for the remainder of their lives as a result of huge losses, making way for an additional crop of bright-eyed, enthusiastic beginners who think they can make huge profits within the stock market. In short, "fresh meat" for expert traders along with the financial institutions in the stock market who await them eagerly.
So how can one prevent themselves from being mauled in the stock market? This is summarised into 2 sentences:
Folks who think investing or trading is similar to gambling often treat the stock market as one giant casino and find themselves getting eaten alive. Conversely, individuals who treat investing or trading as a business venture have a much better opportunity of doing well after they have learned ways to manage to steer with the storms of the market.
In casinos, gambling is attributed to lady luck. Actually, the casinos operate by way of probability; the games are planned such that the percentages are with them and they'll win money for the long term. The stock market on this similar in this way with the casinos' business model as the chances are against the individual investors or traders.
It is important to start with the appropriate mindset. The mindset of a gambler (do take note we are talking about non-professional gamblers here. In reality, professional gamblers often take their craft as a company too and behave as such, that is the secret of the success) is a lot different to that of a company owner. In a business, you frequently cover all bases to ensure your your company will prosper for the long run.
The key question on most beginners' thoughts are this: So how can I start? The solution: Education often is the key. You must spend time to do research and understand the several modes of investing and trading to verify what suits you best. Always start on the basics of stock market systems and ensure you possess a proper entry and exit system for purchasing and selling stocks before you start. Preparation is the important thing to success .
In short, beginners in the stock market often can't generate profits because they don't put in hard work needed which is similar to starting a successful business. However, it is possible to generate excellent money off the stock market and several individuals have managed to do that. If they could take action, anyone can.
