Today we will talk about the biggest mistake that each and every investors do when they start their journey in the stock market. Even though there are investors which have spent quite a reasonable amount of time in the market have yet not been able to find the solution of the problem that we are about to speak, what is the problem we are actually referring to ? Is that problem so big that it actually define a successful and failing investment journey of a person ?
The biggest mistake that we are mentioning here is the mistake of investing at the wrong day.
- By this what we mean is you pick up the right stock you pick up the right fundamentals.
- Yes there is a rally that is expected out of the stock that you have picked, but you have picked it on the wrong day.
- This we believe is one of the biggest mistake that people tend to do & the old investor are also struggling with respect to holding their nerves and not jumping into the right stock at the wrong time.
Let us elaborate on this more.
- Assume you identified a company called XYZ and you want to invest around one lakh rupees you have a holding horizon of medium-term & Long-term depends upon the kind of invest investor you are.
- In every investment there is a cushion or price action that can make an investor nervous or over excited and that is the percentage of drop or the percentage of fluctuation that one can tolerate.
- Let’s say there is a price of a stock which is at around 500 and after checking the fundamental and technical angle of it you came up to the conclusion that the stock and go to 700 from here and you bought the stock
- But before the stock could able to hit 700 from 500. It will go to 450 or 401st know when the stock shows you the downside you get a feeling that you have done it wrong analysis and you take loss and exit when you take loss and exit after some time few days or week you see that the stock start rolling again and eventually hits the target that you actually thought of at the time of putting money.
Why this happens
- This happens because when you see a moment in stock to the extent that it start attracting you to put your money.
- You buy that stock at that time only you don’t wait for it to get corrected because that correction can take a week, 10 days or even a month. People generally don’t have the patience to buy the stock at the price they think is right.
- We can always keep cushion for averaging the stock. When the entire market speaks about the stock, the energy and the excitement of an investor goes so high that he can’t resist.
- Intelligent investor is the one who identifies these good fundamentals.
- Wait for the price to correct then put some money on it.
- Keep some cushion for everything and wait for the target to hit.
- This is not a game for impulsive buyer, but it’s a game of mind because that will decide will you be able to take profit from the market or will you be giving your money to the market?
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