Knowledge is the eye of desire and can become the pilot of the soul.
- Chaoxiang Lee
- Posted Articles: 13
- Last Posted: 2017-06-22 01:50:57
Major Investing Mishaps to Avoid2017-06-22 01:50:57
Every investor is bound to commit a mistake or two. When it comes to stock trading, the only thing more difficult than purchasing a stock is knowing when to sell. Well, the majority of novice and seasoned traders face this plight. Take heed from Warren Buffett when investing. According to the renowned investor, there are two trading rules: never lose money and never forget the first rule.
Perhaps the following investing mishaps can help you commit the same mistakes.
Counting unhatched eggs. A profit is not a profit until you have earned it. However, many traders view their holdings from time to time and delight in the money they have generated. It does not work that way. You gain profit once you sell. Yes, the tax rate is largely steeper for recording a profit if you have owned the stock for less than a year. But it is way better to take a portion than to lose everything after a year.
Being emotionally attached. We all know that letting emotions consume us can definitely affect our trading. And yet many investors fall into the trap. This is somewhat understandable, though. They normally exert much effort into their work in order to look for “the one”. We see them reading books, taking online courses, or attending seminars just in the hopes of making the right decision. Being too emotional can make you pay significant amount of losses. Book author Jim Cramer pointed out that traders should fall in love with a certain stock when it is generating money; otherwise, ditch it.
Thinking this is a great stock. Another dilemma faced by investors is selling a stock when they believe is the best period in the market. Many tend to hold on to stocks with higher returns and minimal debt. However, the stock’s charm is nothing if it is exhibiting a not-so-impressive performance in a sector which is experiencing turmoil. Learn from the experts. Learn from the past. Learn from the experience. If you hold a stock in an industry or sector which is hugely bruised, maybe consider ditching that stock. Remember that stock trading is much easier and less costly than before.