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What's the biggest mistake you've made while trading?
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Meta Moo joined discussion · Dec 30, 2021 04:38

5 Common Investing Mistakes You Should Avoid

What would you say to yourself if you could rewind time and go back to the point when you started investing? What mistakes do you want to avoid most? Mistakes are common in investing, but you can prevent some if you recognize them. We've compiled the typical ones for you from the great answers of our dear mooers at:" What's the biggest mistake you've made while trading?" Please take a look at them and see if they are helpful to you.
5 Common Investing Mistakes You Should Avoid
ONE: Not Knowing What You Are Investing in

Warren Buffett once said that "Risk comes from not knowing what you are doing" and "Never invest in a business you cannot understand." Mistakes occur when you chase the market, blindly follow analysts' reports, jump on the hype train, and make emotion-based investments without doing your own research. Let's take a look at the following cases:
@Venki Kannadasan : Biggest Mistake
@Arthur Williams : Best lesson learned
What can we do about it? A little bit of research can save you big bucks over time. Study and understand the rules of investing. Conduct a thorough investigation on the company you are about to invest in. Take a deep dive into the historical data. These measures can help you understand the market and reduce investment risks.

TWO: Not Patient Enough to Wait

If you take profits too soon, you may regret it like @thefarr Not being patient. It's also not a good idea if you panic when losses occur. What we can do is to stay realistic and adjust your expectations for portfolio growth when necessary. It's essential to embrace slow but substantial growth in the long run. As @Devilton said, "There are always cycles of the up and down trend of the market. Wait for the next cycle and buy in after the market has ended its downtrend, on those that are affected badly but are actually strong. When that happens, you may buy more of your fund." View his full article here.

THREE: Putting All Eggs in One Basket

@Chris Cheung Invest admitted that his biggest mistake was "not sticking to my diversification principles." If you are an individual investor, don't put all your money in one place. It is wise to diversify and be open to more options. When building a stock portfolio, try to invest in more than one sector and explore the unknown. The same logic could also apply to investing in ETFs and managing your assets.

FOUR: Letting Emotions Get the Better of You

Failing to control your emotions is undoubtedly the No.1 killer of investment returns. The most common "enemies" of you are as follows. (Tab the words to view more)
Regret @Ahhhlun
FOMO @Feleshia
Anger @maxtay87
Greed @102678535
Fear and panic @Dadacai
Controlling emotions in trade is not easy. It's essential to be rational when you invest as if you were doing business. Quantify your goals, set the milestones, and execute your plan to achieve your ambition.

FIVE: Failing to Watch Your Step

@WYCKOFFPRO skated on thin ice as a newbie: "When I first started trading, I buy simply based on news without any position sizing. Sometimes all in, some times 50% of the capital...without any trading plan." @IcySilver shared his reflection at: Risk management and stop loss.
It's impossible to steer clear of risks in investing. What investors can do is know their risk tolerance levels and make rational decisions to maximize gains and minimize losses. Advanced traders may lose more often than they win, but they still make good money. It's because they have big wins and small losses. To do that, you should master risk management skills and investment planning. Most importantly, don't forget to stick to your plans. Two takeaways to address this mistake are: "Plan Your Trades" and "Set Effective Stop-Loss and Take-Profit Targets."

The Bottom Line

The mechanism of Investing is sophisticated. We might fall into many more traps than what've we mentioned above. Don't worry. There are always more solutions than problems. What matters is that we are willing to learn from our mistakes. It's ok to make mistakes. Just don't make them twice. Maybe we can start with learning from others at: What's the biggest mistake you've made while trading?
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only. Read more
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