7 Mistakes to avoid while doing stock analysis

7 Mistakes to avoid while doing stock analysis

Why do investors or traders face losses, whether they are new or expert? These following mistakes should be avoided while trading.

Lots of people are trading in stock market but all do not make profits. Peoplemake losses and believe the myth Investing in stocks is like gambling.

Why do investors or traders face losses, whether they are new or expert? These following mistakes should be avoided while trading.

Stock analysis is tool where investors or traders make decision by studying and evaluating the past and current data about the stock market.

Stock analysis is crucial part of investment decision. If any mistake made in stock analysis it would lead to huge loss may be long term or short term and remember you can never recover the losses in stock market, once lost is lost forever. You just earn from what you are left with now.

To save yourself from losses these mistakes be avoided while doing stock analysis:

Mistake1) A Little Knowledge Is Dangerous Thing.

Before making any investment in stock market, invest in knowledge first. The only investment where you don’t make losses but only make profits.

We always study and prepare before giving exams, stock market is life exam where your different skills are tested. In exams if you fail due to lack of knowledge you only loose marks but in stock market, lack of knowledge lead to loss of money and money is precious.

Mistake 2) Following the Herd

Following is not bad but following someone blindly is silly. While preparing for exams we study what toppers do and in greed of good marks blindly doing what they do we leave the important topics mentioned by teacher. Similarly in stock market we follow the upward trend; downward trend and do what expert say without self-analysis and fall in pit like sheep. Proper fundamental analysis of stocks recommended by expert be made before doing any investment.

Mistake 3) Hope Is Not Strategy

If you are investing or trading in stock market you need to have strategy so that you can achieve your targets. Without any analysis and study of company and stocks, profits cannot be earned on basis of hope. Strategy helps you in knowing where you will be going, what might happen.

Mistake 4) Emotions Are Your Worst Enemy in Stock Market

We are human being we have emotions and we easily get emotional but when it comes to stock market you need to be practical. One must not just buy or sell shares just because his friends is doing so. You need to understand the trends, follow the news to make right decision. This can be done with the help of Ticker screener by Finology where you can easily compare different ratios of different time period, compare the annual reports, analyse sector wise ratios and peer comparison. The bundles will help in selecting stocks according to their characteristics.

Practical decision be made if you continuously practice the fundamental and technical research and be consistent with your analysis.

Mistake 5) Everyone Is Expert

If you are new to stock market and take advice from every social media whether twitter, Facebook, WhatsApp, Instagram etc then you should stop trading. Just remember if experts were so expert than they would be buying stocks and not selling advice. If they are selling advice, it means lots of research, time and knowledge is used. This advice is not available for free and any advice available for free is not advice.

Before following any advice, one must carry their own research. Remember warren buffet does not advice any stocks rather he share his strategies.

Mistake 6) Avarice Is the Root of All Evil

Whenever we go for a trip, we carry the return ticket because we know nothing is fun for long time. Similarly in stock market one should know when to enter and when to exit because in greed of earning more one may be left with nothing. If you are investor or trader, you must know your exit plan because avarice is the root of all evil.

Mistake 7) Trade Without Stop Loss

Anything too much is not good it can be profit or loss. There is always a line where you should stop. In stock market that line is called stop loss where you can decide the maximum loss you can bear. Stock market is volatile and you need to be risk taker but risk should be minimum. One should know how much risk one can bear.

These mistakes are silly to read but these some mistakes stop people to enter the stock market which is a wonderful sea if you have your life jacket with you. The strategies and mistakes are the life jacket which help you to stay in the market.