Avoid Stock Market Mistakes

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This presentation will provide an insight into some common mistakes that first time investors should avoid and should be aware of before they start investing.

Transcript of Avoid Stock Market Mistakes


2. Scared of making amistake in the stock market? 3. Avoid First Time Investor mistakes Due to a plethora of brokerage houses providing online trading facilities, stock market trading has become very easy these days. This ease of access is great because it encourages more people to explore investing for themselves, rather than depending on mutualfunds orexpertadvice. However, there are some common mistakes that first time investors should avoid and should be aware of before they start investing. Some of these mistakes are:- 4. Putting all your money in one investment channelYou should never put all your eggs in one basket. Investing 100% ofyour capital in a one market, whether it is the stock market,commodity futures or even bonds is not a good move.If one market does not perform well, then all your investments willgo for a toss. Diversifying your investments reduces losses.Although you may eventually decide to put all your available capitalinto these markets once you are familiar with them, it is better torisk a little bit of capital at a time. This way, the lessons learnedalong the way are less costly, but still valuable. 5. Chasing NewsMaking investment decisions of the basis of sudden news,speculation, and rumors is a terrible move for first time investors.The best case scenario is that you get lucky, and then keep doing ituntil your luck fails. The worst case scenario is that you get stuckjumping in late (or investing on the wrong rumor) time and timeagain before you give up on investing.Rather than following rumors, the ideal first investments are incompanies you understand and have a personal experience dealingwith and which you believe are fundamentally sound and currentlyundervalued. 6. Cheap-priced sharesmeans safe investment This is strictly not true, as the low cost of a stock might mean that the corporation doesnt have a great fundamental base. The market reasonsoutthe basics overthelong-term. Even if you see such shares shooting up pretty fast in the small-term, over the long-term their costs will crash. So instead of being concerned about the costs, consider the business of the corporation. Use the fundamental research techniques to define whether to obtain the stock or not. Remember investing in shares means youre purchasing in the business. 7. Hints & Tips are a sure shot way to earn money in the markets No, that isnt true. Most agents tend to give hints meant for traders and not investors. Traders follow a different strategy from investors. So these hints dont work well for the investors. As an alternative, do your personal investigation and then select the shares to invest in because nobody can predict for sure what will happen in the market. 8. Leveraging UpLeverage is a double edged sword. Using leveragemagnifies both the gains and the losses on a giveninvestment. Learning to control the amount of capitalat risk comes with practice, and until an investor learnsthat control, leverage should be best taken in smalldoses. 9. Start SmallWhen you are starting to invest, it is best to start small and take the risks withmoney you are prepared to lose. As you gain confidence and become moreadept at evaluating stocks and reading the market sentiment, you can startmaking bigger investments. Leverage, penny stocks, news trading, etc. can allbecome part of your investing strategy as you learn. The trick is learning toinvest in more stable markets before you jump into the volatile markets. 10. So remember these mistakeswhen youre planning to invest inshares. It is healthy to obtainprimarily great shares with a longterm view to accumulate wealth. 11. Thank You! Read More Give us your Feedback ORIf you have any questions click on any of the icons below - 12. Registered office: Kotak Securities Limited, 1st Floor, Bakhtawar, 229,Nariman Point, Mumbai - 400021. SEBI Registration No: NSE INB/INF/INE230808130, BSE INB 010808153/INF 011133230/INE 011207251, OTCINB 200808136, MCXSX INE 260808130. Disclaimer: Investments in securities are subject to market risks, pleaseread the SEBI prescribed Combined RDD prior to investing. * Awarded Best Brokerage Firm in India by AsiaMoney in 2006, 2007, 2008and 2009