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Investing Mistakes in Stock Markets

Stock markets have given awesome returns in the last couple of months. NIFTY has moved up 8% odd in just four months. Awesome right?

If you have not yet invested in the stock markets you might be filling that you missing out on something that might had made you richer.. Right?

Not all but many people think this way!

Stock Market

Everyone makes mistakes in life and stock market is no exception. Many people who invest stock markets for the first time don’t research a particular stock and invest, they invest in stocks suggested by their friends or family members. They get carried away with the term “hot tips”.

Here are a few mistakes which investors generally make while investing in stock markets:

Thinking short term over long term:

People invest in stock markets to make money overnight. They generally indulge in intraday trading or short term investing. The maximum money which is made is made over the long term. [Check out the greatest investors of all time]

Not being disciplined:

Many indulge into intraday trading but they are not disciplined. They don’t keep a stop loss and once the stock starts falling down they are afraid to sell it and hold it for the prices to come back to the normal level.

Over Leveraging

When you are buying some stocks with the help of borrowed money, it is called over leveraging. Many brokers allow you to trade for 5 lakh by a trading capital of Rs 1 lakh only or we can call that as 5 times limit. So when you are losing 10%, you are not Rs 10,000 but actually losing Rs 50,000.

Averaging Investments

Whenever you see stock markets falling, you tend to buy more without respecting the quality of stock you are buying. Averaging sometimes may help you to bring down your average price, but in most of the cases, the stock averaging concept doesn’t work especially when you are doing the same for a stock with poor fundamentals.

Playing with Derivatives

It may be rightly said, “Derivatives are weapons for mass destruction especially for layman investors”. If you are not aware of call and put concept or don’t have much idea about trading lots in futures market, one is advised to stay away from futures and options market. Many people get lured by it because of the high returns which are offered by the derivatives, specially options which offer 500 to 600% returns in a single day!

Have you made any such mistake? What’s your take?

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