The most common mistakes of beginners and experienced investors

The most common mistakes of beginners and experienced investors
Table of Contents


Hello, dear friends! Undoubtedly, practically every person has dreamt of passive and additional earnings at least once. Skillful online investing can help you preserve your funds from inflation and multiply them. But for this, you need to follow a set of simple rules and avoid quite common mistakes. In this article, we will discuss these mistakes made by both beginners and experienced investors.

Dreaming of Easy and Big Earnings

Many novice investors look at the investment market with rose-colored glasses, believing that they can make quick and substantial profits. Unfortunately, that's not possible. When investing, you need to think rationally. Chasing mythical huge profits can lead to losses. Therefore, choosing an investment instrument based solely on profitability is a mistake. You need to assess its relevance and reliability.

Excessive Trust

To succeed in the stock market, you need to continually analyze current trends. Wise decisions come with experience. Therefore, many novice investors start by using financial analysts to help them select investment goals. This is good, but on the other hand, don't forget the wisdom of the saying, «trust but verify». Conduct your analysis and choose the most suitable options. Don't expect that you've found your personal golden calf, and your work is done. Depending on expected returns, you may need to repeatedly analyze your investments.

Investing Borrowed Funds

Logically, an investor's potential profit depends on their available funds. Many novice investors don't have a large sum for initial investments. As a result, some begin to invest money intended for emergencies, family operations, children's education, etc. Some even take out loans for these purposes. Never do this! You should only invest money that you can afford to lose without affecting your financial well-being. Otherwise, you risk being left with nothing. None of us would want to end up in dire straits, so it's better to have less but truly yours :)

Following the Wrong Investment Strategy

Before diving into investments, you should define specific financial goals. What level of return do you want? How long are you willing to hold assets without selling them? How comfortable are you with asset price fluctuations? You need to answer these questions. Moreover, you should develop an investment strategy. You shouldn't buy everything that catches your eye at a certain time. Each position in your portfolio should have a clear rationale. Don't jump from one extreme to another. Following a specific algorithm is the key to success!

Lack of Diversification

In addition to a sound investment strategy, you should choose a proper balance allocation method. An equal amount of funds should be allocated between each asset. It's most reasonable to allocate 3-5% of your balance to these purposes. This way, in case of an unfavorable outcome, you have the opportunity to restore your balance to its original state.

Playing by the Martingale Strategy

Losses are inevitable. There are no individuals whose accounts have never experienced a decline due to market fluctuations. To minimize their risks, some investors employ the Martingale strategy, which has transitioned from the world of casinos into the realm of investments. Its essence lies in the trader entering a position with an amount significantly exceeding the initial investment when the market declines. In the event of a favorable outcome, the profits from the trade should offset your losses. But what if the next trade is also unprofitable, and the one after that? This is precisely why the Martingale strategy often leads to losses!

Neglecting Small Expenses

Novice investors are often wary of excessive expenses related to various operations. Remember that the investment market is a highly competitive environment. Many reputable and reliable brokers offer minimal fees. Your task is to find the most optimal offers. Often, seemingly insignificant expenses that are incurred at the beginning can significantly reduce your overall profits. Preserve your money and don't give them away to unknown entities!

Lack of Emotional Control

One significant challenge for investors, regardless of their experience, is controlling their emotions. It's tough to remain composed when your portfolio is visibly dwindling due to market downturns. However, in such situations, it's essential to gather your willpower and stay calm. Besides avoiding panic, you must also steer clear of excessive excitement. Overexcitement can deplete your balance even faster than the most severe asset price drop. After initial successes, resist the urge to purchase more and more impulsively.

Avoiding Interaction with Other Investors

Some beginners place themselves in an informational void. They search for information across the internet, read random investment advice and rules, and then impulsively enter trades. This is the longest path to gaining experience, based on your own mistakes. It's better to learn everything by interacting with your peers in the field. Learn from others' mistakes. Communicate and don't hesitate to ask questions! Join our Telegram chat and subscribe to our channel!

In Conclusion

We wish you success in the vast sea of investing! Be calculated and less emotional. Invest only in areas where you have a better understanding. Analyze and communicate. Avoid foolish mistakes and reckless actions. Join us! Follow us on social media and become a part of our friendly community of investors :) Ask questions and share your thoughts in the comments! Each message won't go unnoticed.

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