1. Lack of Patience
Investors need to understand that the entire journey of investing is a long and continuous process. Along with money, time is an important resource that is required to be invested in the stock market. The longer you are invested, the better are the returns.
Once you choose the right company to invest, the company will help your money grow. You just have to buy the right stock and wait for the appropriate time. The prime goal to invest in equity markets should be to satisfy the long-term objectives
2. Investment in Penny Stocks
This is one of the mistakes which beginners make. Penny stock are low-value stocks and appear to fluctuate tremendously in price, which, they convince themselves, should lead to an opportunity to generate a very high return and that too, very quickly. Most of the investors invest in penny stocks due to the frequent fluctuations which seem positive but I could make an investor lose his invested capital if the investor doesn’t have proper knowledge of share market tips.
3. Timing the Market
Another important factor is the timing of investment i.e. entry and exit in the stock market. Wrong timing is one of the most common mistakes that the retail investors tend to make. The decision to buy and sell stocks should not be dependent on acquaintances. One of the crucial sectors where the investor tends to make this mistake is commodity market. As we know the prices are affected by international events too, and if the investor is unaware of those, he can’t make the right of this time. An investor may choose free commodity tips for additional benefits to its commodity investments. As we know, the commodity market is not highly volatile, but can still fetch great profits if invested wisely with suitable capital.
4. Lack of discipline
Another beginner’s mistake is the utter lack of discipline in the stock market. The prices of all the shares in the market move several times, to a large extent, because of multiple investors booking their individual profits/losses. The price fluctuations are only an outcome of two emotions – “greed and fear”. One should follow strict disciplined risk-reward ratio based on the idea at the time of buying the stock i.e. intraday or positional or delivery-based trading.
5. Use of Margin to create leverage
This is the last and most important mistake to be avoided, but however, done by most of the investors at the beginning of their careers. The margin allows you to leverage the funds and securities in your account to enter larger trades. The loan is collateralized by the securities and cash in your margin account. Leverage in any business means the use of debt to finance the assets. Short term traders use Margin from their brokers to create leverage. Leverage allows a trader to claim full ownership of the share by paying a marginal amount.