subject: Learn About Shares - 3 Reasons Why People Lose Their Shirts Trading The Markets [print this page] I talk to people all the time that would love to learn about shares, trading the stock market, and get great returns. However, most of these people are scared to enter the market and, to be honest with you, they should be. The reason being that they do not have any idea what they are doing. I always tell people - 'Don't Gamble, Get Educated'. It's very important to educate yourself before you get into the markets. The more educated you are the better you will do. Here are 3 reasons why people tend to lose on the markets and what you can do to avoid these mistakes.
Get Emotionally Involved
One of the worst mistakes you can make when trading shares is allow your emotions dictate your decisions when buying or selling shares. You may let greed take control of you due to a 'hot tip' from a friend of yours. You don't have hardly any idea why you are investing in this stock but you can't pass up this deal. Or, if you've bought a stock, you hold on to it for a long time even though it keeps falling in price. Your emotions tell you that if you sell, you'll lose all that money. Instead, hold it in hopes of it rebounding.
These kinds of emotions can cause you to throw away a lot of money. Instead, you need get some basic education and get some professional advice from someone that knows what they are talking about. I recommend finding a broker that can give you proper advice based on the research that his analysts have. All of this will let you make a smart decision instead of an emotional one.
Passive Investor
Passive investors are people that have bought shares sometime in the past and have no idea how much they bought, what price they bought at, at price it is now, and they hold onto it forever. These types of investors typically lose money because they are not in control of their investment. Instead of being a passive investor you need to be an active investor.
Now this doesn't mean that you have to be trading every day. All this means is that you keep track of the stocks you buy and get out when you need to. This will help you to maximize your profits and minimize any loses.
No Attention To News
We hear all kinds of news everyday but have you ever wondered how that news would affect different company's stock prices? If a company wins a huge contract, usually this will cause the stock price to increase. However, if a company has some environmental or financial bad news, this will usually cause the stock price to fall. Of course you don't have to be watching the news all day. But if you have bought a stock, it would be a good idea to get news updates to your phone for you to scan.
Likewise, if you hear something on the news that sounds very favourable for an industry or company, you might want to look into the market to purchase stock based on that news. You probably would want to ring up your broker and get more advice on that company to make an even better educated decision.
