Most Common Mistakes To Avoid In Growth Investing
Every trader in the financial market aims to build wealth; hence your decision plays a vital role here. In this market of possibilities, what you do and what you do not do are equally important. Growth investors can conserve a massive amount by avoiding some of the common mistakes. Here is the compiled list of most common mistakes to avoid for you; read and follow to harvest more out of the market.
Selling the stock too early
The common mistake made by the trader is selling the stocks too early just because they are providing a quick profit. Thus, the trader falls into this trap of locking in this quick but low profit.
Many analysts suggest that investors should not sell and hold the share until the reason for buying it fulfils completely.
Fixing the price
All traders tend to anchor themselves to the reference points of the past. They generally look at those stocks which attained the new heights in the 52-week. Hence they conclude that the stocks might be too high or expensive just because their price has hiked and they are not cheap the way they were in the past.
The reality is that these stocks are the one performing best in the stock market and can hit new heights over several years constantly. Hence if you ignore or reject these stocks, then you are closing your door for the biggest win in the international stock market.
Just following your perspective rather than evidence
People generally ponder too much and spend the entire time, considering only their viewpoint.
When someone does the same thing as an investor, then he can easily build a conclusion over a thing by merely looking at a service or product and relating them with his own life. It is not at all a right approach. You must look at the evidence and perspective of other people too, before making a decision. It is because the evidence might say something different which you might not have noticed.
Getting attached to a stock
Profit on every investment is not important. Some investments might work out some might not. We all make general mistakes, and they are unavoidable. But, the real problem lies in the point that many traders get deeply attached with some specific stock.
The moment this happens, the traders develop a tunnel-like vision for that stock. It means that he mainly focuses on the small arena of the business, which favours his view rather than seeing and zooming out the big picture.
It is seen that the professional and experienced traders are more prone to such things rather than normal traders. Dr Robert Cialdini writes in his famous book Influence: The Psychology of Persuasion that those people who make their statement public about their belief tend to develop a firmer opinion that their belief must be true.
Thus portfolio managers and analysts who make their point or belief publically face a tough time in coming out of that strong view. And it is not about intelligence; it is human behaviour.
Investing in those assets which you do not understand
Whether you are a pro in the field of investing or you are great at looking into the trends of the financial market, think while investing in a sector you hardly know.
Always adhere to what you find interesting and what you enjoy the most. There are huge chances that you will understand these stocks better in comparison to the industry which you hardly know. It will not only enhance your confidence but will also increase the chance of mitigating the mistakes to the maximum level resulting in massive profit and success in the international market.
Choosing the wrong broker
Multiple brokerage firms are running across the world. It consists of both the authentic and the fake ones. The fake usually lures the customer by guaranteeing 100% profit on zero investment or best features on absolutely zero fees. Do you think these promises are easy to digest? Don’t you think they are misleading you? But still, some traders fall into their trap and end up with the zero account balance.
Stay vigilant on such fake activities and fake promise. No, one in the world will provide you with all the profits and that too on zero fees. You might be wondering now which firm will fit you trading expectant best. You can go with InvestFW.
Getting trapped into the fake news
It is good to stay updated on each market price shift, but at the same time, you are aware of the fake news and fake news channels. One of the most common mistakes which traders make is failing to distinguish between the real and fraud sources and thus ending up making the wrong decision.
The Bottom Line
Growth investing seems to be attractive as it can lead to massive gain if planned wisely. But the most common mistakes are the biggest barrier to it. Hence concerning this, we have designed this chapter to make you aware of the most common errors which traders make while investing. Continue reading our course. The next chapter in this series is Growth stocks vs dividend stocks. Which should you buy?