If you’re an investor, or at least want to be one, I have some good news for you. It is now easier than ever to buy and sell stocks online. The challenge is that because of this, it is also very easy to make investing mistakes. To help you avoid some of the most common mistakes, let’s briefly outline a few of them.
Using the Wrong Tools
Make sure that you pick tools and use information that conforms to your investing style. Many online brokers only offer tools that encourage trading because they want you to buy and sell often. If you are an investor, it is important to understand this and that it is also necessary to research the fundamentals. Don’t make the mistake of letting these broker tools guide your stock research.
Using the Wrong Broker
Brokerage costs can add up over time. Therefore, make sure to pick a low-cost broker. It may seem hard to believe, but many online brokers still charge $20 or more per stock trade. There is no reason to pay this much per trade, since there are a number of brokers that offer trades that cost less than $10. Therefore, make sure to examine your options and pick the broker that offers the best price and services for your investing style.
Making Rash Decisions
It is now possible to buy stocks with the click of a mouse, without doing any detailed research first or talking to anyone about your decisions. It may seem like common sense, but this is a big mistake, and one that many amateur investors make. Take the time to thoroughly research the stocks you are thinking about buying, and you will consistently make better investing decisions in the long-run.
Analysis Paralysis
Alternately, if you think too hard or do too much analysis before buying a stock, you can get stuck in a rut where you are afraid to buy anything at all. This can happen easier than you think because there is so much information available online about stocks and investing. Come up with some consistent research steps and some clearly defined investing criteria, and you can help yourself to avoid this potential pitfall.
Letting Your Emotions Take Over
This is one of the most difficult aspects of investing to overcome. If one of your stocks is down 10 or more percent in a single day, would let fear overcome you and sell it or would you hold on tight or even consider buying more while the share price is temporarily low? If you think you can’t withstand price fluctuations, then maybe investing in stocks isn’t for you. After all, the goal is to buy low and sell high, right?
In Conclusion
There are many pitfalls for individual investors to avoid. Taking the time now to learn how to recognize and avert the most common mistakes can help you to become more skillful as an investor and help your portfolio grow larger over the long run.
Dan Cappel is an experienced investor and is dedicated to helping other investors learn how to research stocks. You can use the free tools he offers at his website, http://www.smartstockresearch.com, to create and personalize your very own investing strategy. No one else offers tools like this online. Sign up today for a FREE account and begin researching stocks like the pros!
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