The stock market is all about Profit losses. and the most question is why people lose the share market? some people earn money and some people lose money from the stock market. but what are the mistakes that people do while trading that results in losses? here I’m sharing 16 points Why People Lose Money In Share Market.
1. Doing Intraday Trading initially.
90% of people lose money in the stock market because people come to the stock market. Initially they started intraday trading without any knowledge. Luckily if they earn a few profits. Then They increasing trading amounts. After following some particular stocks movements for a few days’ new traders invest more money in stocks. when stock changes momentum then they lose huge amounts of money.
2. Aiming to rich quickly
Yes, everyone wants to get rich quickly But it’s the biggest mistake in the share market. To get high returns. They invest in very volatile, penny, risky stocks( which stocks price fluctuate very high). people want to be like billionaires Warren Buffett but don’t understand that above 90% of the money he earned after 50years. Warren Buffett always invests in a fundamentally good company for the long term. To rich quickly people started Gambling( example: people doing intraday, buying fundamentally weak penny stocks). and in the end, lose money.
3. Not doing proper research.
Mostly new people in the share market not doing any research and put money in stocks. When you don’t know what is the future of the company and management systems of the company. then you have a possibility of loss to money.
4. Following anyone blindly
Following blindly to anyone that isn’t always a good thing. everyone’s money holding times, risk-taking capacity is different. so if a successful investor put $1 to some stocks that don’t mean you should buy those stocks. because successful investors have large Portfolios. they can easily manage their loss but retail investor can’t do.
5.Social media Influence
Social media is good but Some times social media influence you to invest in some stocks. so that you can double, triple your money quickly. Think about it, If Someone doubles their money quickly then why they are making social media posts, videos to earn money. They will show you how much they earn, but will never show how much they lost. Sometimes they are paid or have the intention to enter you in particular stocks so that they can sell their stocks and make a profit.
6. Buying falling stocks
New or even some old investors make these mistakes too. Some stocks fall too much then, some investor tries to buy stock to see low prices then stocks continue falling.
7. Not Updating with current news
People have invested their hard earn money in the stock market. Stocks Price changes with information, Within a fraction of seconds stock momentum can be changed. Many people lose money for not updating with current information. when invested stocks falling then peoples have no idea. why stocks falling and what should I have to do this time.
8. Putting all money to one stock or one sector
Warrant Buffett said that “Don’t Put All Your Eggs in One Basket” never put all your eggs to one basket”. Most people invest all their money into one stock or one sector. This is one of the biggest mistakes in the share market. If any issues with this company or sector that will be a huge loss. And after losing they leave the stocks market.
9. Share buying with Brockers Margin
Example: You have $10 and you want to buy the “X company” share. current stock value is $5.so you can buy 2 Stocks for $10. But Brockers help you to buy 10 times of your current money. So you can buy $100 stocks. Which are 20 stocks? If share tank 10% then that means the current invested value is $90. Your money is zero right now.
10. Stop-loss
Most people forget to give stop-loss which results in a loss in the share market. Stop-loss saves your money from a big loss. when share price falling too much, at a certain price of stocks falling exiting from stocks make a huge amount of losses.
11. Pickup wrong shares
Investing in fundamentally weak companies, not good track records companies, business future is not clear & zero knowledge about management systems. These Stocks May convert to losses.
12. Lack of patients.
Finding the best time to invest in the stock market is key to success.having money in your hand that doesn’t mean you have to invest all your money into the stocks market right now. Some people don’t have patience in the share market. they suddenly invest all their money to share the market. Then only watch on Stocks, cannot do anything. this is the also reason Why People Lose Money In Share Market.
13. Act on half news
Actually this happened to me many times. suddenly news sources publish some news about company and stock price going upward, then buying in these stocks after sometimes later when the company discloses the proper information and stock price going down and losing money.
14. Emotion
We emotionally connect with some stocks and after falling day by day, we won’t exit from these stocks that is the reason Why People Lose Money In Share Market.
15. Not calculating Charges
This is a common issue with traders. they trade multiple times and get profit but after calculating brokerage fees and taxes. then trader sees lose money.
16. Money management
Wrong money management results in a loss in the share market, After profit and loss people failed to Manage money. Good money management always secures you from huge losses.
If you take the risk to lose 1USD then Your Profit should be 2 USD.so that if you are 49% wrong still you will be in profit. calculation be like loss $49 and you are correct 51%, then the total amount will be in your hand 51*2=$102.$102-$100=$2( total amount – Invested amount = profit). in the and your profit will be $2 ( excluding brokerage charges and taxes).
Conclusion
Why People Lose Their Money In Stocks Market? answer: Learn more & more about the share market before investing. Even successful investors can lose money in the stock market but they overcome from loss by good money management. your you have a question, please comment below. definitely you will get a quick reply.
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