Stock market is seen as a get-rich-quick scheme by many and that is one of the biggest reasons they tend to fail afterwards. There is no doubt that stock trading can give you financial freedom and success, but nothing is just as easy as it seems to be at first.
The same goes for the stock market as well. Ever wonder why some people end up becoming millionaires through stock market trading while others fail and lose all of their money? All the difference lies in their approaches and strategies.
There are some common stock market mistakes that many investors make, which further lead to the loss of their money. Suyog Dhavan, an experienced investor with over 15 years of experience in the field, explains why most people fail in stock markets.
Below are some key insights drawn from his explanation, which will help you understand stock market basics for beginners and the mistakes that traders often make.
1. No Proper Goals
Entering the stock market without any goals will take you nowhere. How can you even expect to start if you don’t know where you want to reach? Therefore, you should have a proper idea of what you intend to achieve by investing in the stock market. Your goals can be short-term or long-term based on your requirements. A short-term strategy might not help you achieve your long-term goals and vice versa.
Now based on these goals, you can build a strategy that works for you. Many investors enter the market without a proper strategy or they just replicate a strategy they found somewhere else. But before you adopt a stock market strategy, you must ask yourself if it is relevant to your objectives. If not, just create a new one and follow that.
2. Investing in Stocks and Not in Business
There is always a business behind every stock and the success of the stock depends very much on how that business performs. So, keep in mind that you are investing in businesses and not just in stocks. Some people fall in love with certain stocks without having proper knowledge about the corresponding business.
Rather than doing this, you should analyze the company’s financial statements, KPIs (Key Performance Indicators), etc, to see its revenue growth and overall performance. It will give you an idea about the business profitability, which is a significant factor impacting the profitability of its stock.
3. No Mentor
Having a mentor can save years of your life. Many investors enter the market without proper knowledge and guidance. They end up spending many years in hit and trial as they invest, make mistakes, and learn from their mistakes. Some investors are even discouraged when their strategies don’t work and they have no one to guide them. As a result, they quit.
Therefore, it is important to learn stock trading and have a mentor before you enter the market. For this, you can join Strategic Alpha’s Conviction Club, where you get to attend one-to-one sessions with mentors having years of experience and expertise in the field. This will save a lot of your time and money.
4. Trading Based on News
As Suyog Dhavan says in this video, “News is poison. Predictors don’t make money and those who make money never predict. Prediction news will never help you make money.” This sounds very true in terms of stock market trading.
If you are investing in any random stocks based on what you see in the news, you are making a big mistake. Nothing, literally nothing, is likely to work in your favour if you don’t have a strategy of your own and you are just putting your hard-earned money into any random stock.
5. Lack of Willingness to Learn
As mentioned earlier, the stock market is not a get-rich-quick scheme. The sooner you understand this, the better. Many investors, especially beginners, see the stock market as a way to get rich in a short period of time. And when things don’t seem to work in such a way, they are discouraged. But you must understand that investing doesn’t work like that. You have to learn stock trading and there is no alternative to it.
If you are not willing to learn, you will end up losing now or at some point in future. If you are making mistakes, accept them and learn from them. This might sound rude but the stock market is not a place to satisfy your ego. If you are wrong, you must have the courage to accept it and find out the right way.
Concluding Thoughts
“We have been taught how to win but not how not to lose.” – a very deep and relevant statement by Suyog Dhavan. In order to succeed in the stock market, you not only need to learn how to win but also how not to lose.
Losing money can be the biggest drawback of stock trading and once you learn how not to lose money, you have almost won it. This is what the mentors at Strategic Alpha focus on.
By joining our techno value investing workshop or becoming a member of the Conviction Club, you can learn stock trading in a very easy-to-understand manner and receive continuous guidance from mentors. Also, they teach you how to build the right strategies based on your objectives. For any further information, get in touch with us!
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Very important note: The objective of this blog is to share knowledge and info about multi-bagger ideas/opportunities. Neither is this trading website nor an analyst website nor a Buy/Sell call website. For stock market success, always do your homework, own analysis, and make your own decisions.
