Why investors lose money in the stock market: -10 reasons that will keep you profitable
Making money in the stock market is not easy. The large of big money always draws investor towards the stock market for making any profit in the stock market a person should have the good understanding of market up and downs.
If any other countries stock exchange market slopes down or an increasement then it means that our India stock exchange will also affect it. Be focus in national and international markets also for making profits in stock exchange.
Last hundred years ago there have been several large stock market crashes that have plagued the American financial system for ex-during the great depression stock prices dropped to 10% of their previous high during the rash of 1987.
In the simplest way, investors buy shares certain prices and they can sell the share at some capital gains. If the share prices drop dramatically the investor will not realize any money even you will go in loss.
Suppose that an investor buys 1000 share in a company for a total of 1000 due to a stock market crash the prices of the share drops 75% as a result the investor position falls from 10,000 shares worth 11,000 to shows worth 250 in the case if the investor sells the position he/ she will incur a net loss of RS 750.
Another way that an investor can lose large amounts of money as results of a stock market crash is by buying on margin. investors borrow money in order to make a profit, more specifically for making profit in stock market some investor borrow money for investing is share the put their whole and a large amount for making a small profit in the stock market when he sells the share and he pay’s the loan and interest, a small profit will remain for him for ex if an investor borrows $1000 from bank (at the 10% interest ) and then ambines it with $1000 available for investment purpose if that money is invested in a stock market that yields a return the investor will receive a total of $1110 after reliving the loan(with interest) about 22 will be left over as a profit.
10 reasons will keep you profitable
- ignoring the fundamental of investing
Little bit knowledge may not be sufficient for getting good returns little bit knowledge will always keep you in danger zone. if the basis of stock marketing id forgotten. These basic can help you hold your ground even in a different market and can create big money for ahead’s as soon as you learn fundamentals of the stock market it will be profitable for you and will bring a bright future and money.
- Taking advice from wrong sources
Many investors try to seek guidance from their relatives and friend. If Even Those friend and relative are having zero percent knowledge about stock marketing fluctuation. As a result of this can make you lose so be aware from asking those who are not having knowledge about the stock market.
It is difficult to make the prediction in the market don’t think it can be the upward increase or invest in the market. So don’t invest like this always believes in fact and profit.
- lack of patience
A person should have patience in the stock market to make money. Be patience after buying or before buying importance never to leads you to make the maximum profit. Therefore it is important for the investor to wait for the time the best time you got invest instantly in the market. It will lead you to make higher profits.
- Incorrect portfolio structure
Many investors in equity market do not know how to make a structure rightly. If All Due to lack of professional guidance. Which in returns result in Massine Errors being made in portfolio construction. “Non-diversification is one of the biggest mistakes that most people make as they are so confident about their stock that they think it” illogical to invest in multiple stocks which may average out the profits.
- having the herd mentality
having herd mentality do not follow others because sometimes when people watch their neighbors, friends, and colleges making money in the stock market they feel left behind when they start doing same plans and strategies may not suit you and you might even end up losing substantial money it is in your own interest therefore not to follow others.
- unrealistic expectations
We all human beings are greedy by nature and are newly satisfied is it. Our compensation or investment return. We want more of everything .this sometimes makes us set unrealistic targets which are unrealistic targets which are unachievable therefore it is targeting which are you to set realistic targets.
- lack of switch action
An investor should know his limit don’t be greedy in share market for the more profit many investors lose their money.
- Insufficient research
Always study about that company in which you are investing if you are not studying it means you were about companies.
- No control on emotions
While there is the need for investors to focus on making effective, careful decisions that hold a long-term goal like retirement, a person’s emotions can cloud his investment decisions, leading to choices that are not in his best interest. For example, when stock market remains bearish for a long time, some investors lose patience and sell their shares and stocks at rock-bottom prices, incurring losses. On the other hand, “sometimes some people buy shares of unknown an unworthy companies without really understanding the risks involved. Thus, instead of creating profit, such investors burn their fingers very badly the moment the sentiment in the market reverses. Therefore, don’t let either fear or greed cloud your judgment,” says Ashish Kapur, Co-founder, Invest Shoppe India Limited
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