Common mistakes in stock picking: Getting TOO EMOTIONAL
Mistakes in stock picking: Stock market – an all-time catchy term everywhere. From local trains to tea stall, home chat to corporate dinner – it’s a hot topic. Just the name should be heard once. People are just crazy in talking about it. Does not matter how much money one has invested actually in it or not at all; or how much expert one is in reality or not having any clear idea how it works – people just love to be part of this gossip and love to give expert comments.
I am writing down the common mistakes as a trader we do while we invest in stock market. I am trying my best to simplify the errors and make a series so that these can give you some eye opener while trading.
Stock – should I ‘BUY’/ ‘SELL’ or just to ‘HOLD’? Three simple words!
But we know how much important words these are in stock market. Especially when we need to take a decision ‘WHAT TO DO?‘
Making money in stock market is sometimes too boring. The maximum traders don’t have the patience in holding the stock as well. The mind-set is all about getting money in short cut. “how to accumulate maximum money in the shortest span of time” – this is basically the psyche of the traders. Even the investors who are matured enough in trading lose their money with a single mistake. There are various reasons.
“Getting emotional” in picking up the stocks is one of the major mistakes normally a trader does. The stock might have given good return in past. That does not mean that in future also it will give the extensive return. People just get confident while picking the stock.
In fact they start recommending with lots of confidence that this is “Good Stock”, and will give healthy return like past. Self Confidence in trading is good, is good in a way that traders don’t just get flooded with the various market tips and start experimenting all. But over-confidence while picking up stocks pushes them towards loss. It’s just greed that good days will last forever.
Being optimistic is always nice. But in stock markets listening to the heart keeping a blind eye on ‘hope’ is dangerous. Times come when heart will order to pick a stock while intellect will start doing analysis- listen to your intellect. Not the heart. Our sub conscious mind works while picking up the stock. Even our heart says it can give good return and directs to be optimistic and take a risk, but at the back of the mind we always know we are going to take a risk. Equal chance is there to win or lose. After loss, we think “if I would have thought a little bit!!” If without doing any sort of analysis you are going to pick up stock where there is no fundamental or technical reason, chances are very much that you are going to lose money.
Recommendation: Don’t be emotional while picking up the stock! Do your homework properly and then decide which stocks to pick. There is no point in taking decisions purely on the basis of emotions.
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