Most Common Investor Mistakes

Being stubborn and holding onto losses when they are very small and reasonable is a big mistake. Most could get out cheaply, but because people are human, emotions take over. You don't want to take a loss, so you wait and you hope, until your loss gets so large it cost you dearly. This is by far the number one mistake most investors make; they don't understand that all stocks are highly speculative and can involve huge risks. Without expectation, you should cut every single loss short. The general rule is to always to cut all losses immediately when a stock falls 7% or 8% below your purchase price. Following this simple rule will insure you will survive another day to invest and capitalize on future opportunities.

Buying on the way down in price, thus insuring miserable results is also common. A declining stock seems a reel bargain because it's cheaper than it was a few months earlier. Don't try to catch a falling dagger. Big mistake.

Averaging down in price rather than up when buying makes sense? If you buy a stock at $40 and buy more at $30 and average out your cost at $35, you are following up your losers and putting good money after bad. This amateur strategy can produce serious losses and weigh your portfolio down with a few big losers.

Buying large amounts of low priced stocks rather than smaller amounts of higher priced stocks makes sense. Many think it is smarter to buy more shares in round lots of 100 or 1,000 shares. This makes people feel like they are getting a lot more for their money. They'd be better of buying 30 or 50 shares of higher priced, better performing companies. Think in terms of dollars when you invest, not the number of shares you can buy. Buy the best merchandise available, not the cheapest. Many investors can not resist $2, $5 or $10 stocks, but most stocks selling for $10 or less are cheap for a reason. They have either been deficient in the past or have something wrong with them now. Stocks are like anything else: The best quality never comes at the cheapest price.

Not being able to recognize and follow good information and advise. Friends, relatives, certain stock brokers, advisory services might all be sources of bad advice. Only a small majority are successful enough themselves to merit your consideration. Outstanding stockbrokers or advisory services are no more plentiful than outstanding doctors, lawyers, or ball players. Only one out of nine baseball players who sign pro contracts ever make it to the big leagues. Most of the ball players that graduate college simply are not profession caliber.Share Trading Facts:
There is criticism on the validity of using these technical indicators in analysis, and many professional stock traders do not use them.

However, these fiscal obligations will vary from jurisdiction to jurisdiction.

Although many companies offer courses in stock picking, and numerous experts report success through Technical Analysis and Fundamental Analysis, many economists and academics state that because of the efficient-market hypothesis it is unlikely that any amount of analysis can help an investor make any gains above the share market itself.