Why do so many who invest in stocks lose money when there are hundreds of thousands of web sites, gurus, newsletters, system vendors telling you investing in stocks for massive profits is oh so easy?
Investing in stocks, in my opinion, is not a mystery. There are no Holy Grail investing systems out there where profits will automatically fall into pockets. There is no one stock investing method that is the BEST way to invest in stocks. Just like there is no one best way to run a business, get fit, be happy, be successful, acquire wealth. There are simply methods that work and methods that do not.
Many people who attempt to invest in stocks and fail at it seem to commit the same cardinal sins. I have listed the ten most common reasons many investors in stocks fail to make a profit when there really is no reason not to:
1) You do not plan. When you get into a stock you must have reasons why. Where will you get out? What happens if the stock flies up 200% in the next 3 months? Will you add to your position. "Trade you plan and plan your trade."
2) Over diversify. You own too many stocks. Like a child in a sweet shop you can't resist buying this and that stock. Focus is the key to large profits.
3) You do not have a system/method. You trade from opinion, tips, outside advice. I don't know anyone who has made money consistently from third party advice.
4) Money management is more important than where to enter. Money management is a vital subject when investing in stocks. How much to buy? How much to risk. This is where you success lies.
5) You actually trade/invest too often. You want to trade all the time. You want action. You are not patient waiting for those ALMOST certain trading/investing opportunities where big profits will be GIVEN to you. You are drawn into short-term gambling methods or even highly stressful day trading techniques. Not realizing the big money is in the big moves. Be patient and the money flows in.
6) You will not pay for specialized advice. For a fraction of the money you can make investing in stocks you can accumulate fantastic information and tools that will help you in your lifetime career of making money from stocks. But being too cheap you prefer to go it on your own. Losing your precious $10,000 account tin the process.
7) You fail to take your time and build your stock empire slowly but surely. Get rich quick schemes sell so well simply because 90% of the population are stuck in this "get rich quick" attitude. It takes time, effort and determination to build the knowledge and experience necessary to make big money in the stock market. It's the same as any other business.
8) Instead of becoming the very best at one style of trading/investing you jump from one hot trading/investing method to the other. To make more money than you could ever dream about in the stock market vow to become the VERY best at one style of trading. Sure the market goes through cycles. The big money is made from a specialized investing method. Not a "jack of all" investing approach. Take a look at millionaires from all industries. They specialize. You don't see Bill Gates learning about the stock market. you don't see Warren Buffet going into software design. they are the leaders of their own specialized niche markets.
9) You will not cut those losses. As strange as it seems many investor/traders of stocks will NOT cut those losses early. This is a lack of planning, fear of losses and arrogance. cut your losses early and watch your portfolio grow.
10) You really didn't want to invest in stocks. I see many people who are desperate in their current situation. They dislike their day job and read there is money to be made in the stock market. Having never read a stock book, or shown the slightest interest in the past, they buy a trading course and expect to make big money from it. There is no interest in investing in stocks. They have no passion about learning about the stock market. If you do not enjoy investing in stocks and learning about the stock market then make your money from something you really enjoy.
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