One Major Investing Mistake Most Of Us Make

Investing is not science. Investing is a game and an art. The more you practice it the more you are going to master it. The problem is how much pain you have to take before you learn the ropes. Most people do a lot of research before investing into a stock. It is a good thing to do your research meticulously before you invest in a stock. Once most people buy a stock, they check the price daily. Before entering into a stock trade, most have a sell target. Suppose stock price goes down instead of going up. Many people don’t think about this before investing in a stock. When stock price goes down, they assume this dip will not survive more than a few days. What if the stock price goes down and stays there for weeks? The most important mistake that most investors make is getting married to a stock. Never do that. You should have a plan before you enter into a trade what happens when the things go terribly against you.

We hate to admit losses: The phenomenon of hanging onto our “losers” is known as the “disposition effect.” Basically, we can’t stand to realize our losses — it’s just too painful. So, we leave them there and ignore them, focusing instead on our winners (which we’re relatively more likely to sell to lock in our gains). What drives this behavior? Pride? Ego? An unwillingness to face the truth?

 

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