6 Counter-Productive Investment Practices an Investor Should Avoid

Best Trading Club

The first lesson in the world of investment is to learn or be aware of some common mistake s which, most investors generally make. This helps make an infallible decision while picking stocks at the subsequent stages. Here is a list of some counter-productive mistakes which, at best, should be avoided.

1. Making a Decision Without Knowing The High and Low of An Investment:

The fundamental logic of investing your money is simple and straightforward – buy a stock at a cheaper price and sell it at a higher price. Sure, it sounds like a simple rule to follow but in practical terms, it may be diametrically opposed, especially if you are now aware of what the “high” and “low” of investment actually means.

Thus, as a stock trader, it is imperative that you do some homework on your part before jumping in. What is “high” to you may not be the same to the buyer who is interested to buy a stock from you. At the initial stages, you focus should be on learning the basic metrics like P/E ratio, dividend yield, book value and so on. While you do it, lay your emphasis on what they are all about, how they are calculated and how you can get an edge over others by applying them to your decisions.

2. Improper Use of Penny Stocks:

Investing in a penny stock might look tempting to you at first glance. However, you need to hold on a bit and consider a few things before translating your thoughts into action. There is a reason why these stocks are called penny stocks – it pertains to those companies that do not calculate profitability. As a result, a marginal loss with such stocks on pen and paper can be a blow to you below the belt. For example, a loss of mere $0.5 on this type of stock can amount to a 100% (total loss). Also, they are prone to liquidity and manipulation.

3. Putting All The Eggs in One Basket:

No matter whether you have been in the world of investment for some time or have just stepped into it, the standard rule, which is also the golden rule of investment, remains the same for all – never put all your money on a single investment. Wondering why? Here’s why – you never know how or in what way the stock market would perform on a given day. If you have concentrated all your wealth on a single stock, a bad performance of it can rip you off in the entirety. On the other hand, diversified investment means you would still have a ray of hope to recover by virtue of the better performance of the other stocks.

4. Leveraging Up:

Leveraging your money with a certain investment refers to borrowing some money to purchase an additional stock than your actual financial capacity. You need to be careful while doing so as it can go either way.

Consider this – suppose you borrow $ 50 so that you may acquire $ 150 out of the overall value of a stock. You may either make a gain or a loss, depending on the rise or fall of the value of the stock. If it rises by a margin of 10%, you make a gain of $ 15. On the flipside, if its value depreciates by 10%, you lose$ 15. Thus, as it is apparent, leveraging up can sometimes be a risky affair when done without a proper consideration or calculation.

5. Investing All The Cash in a Go:

Going by the standard approach, most investors believe the more one invests, the more one gains. However, there is a counterargument to it too. If you have the big picture in mind or if you are thinking about a long-term investment, you might not like to be strapped for cash. Therefore, it is a wise thing to always set some cash aside – it comes in handy to assuage an emergency or as a last resort for subsequent investments.

6. Forming Decisions Based on News:

While beyond doubt, the news on investment or the news shows can serve as a valuable source of information to help you make a decision, it can be misleading as well. The secret recipe for success is to not close your ears to what others are saying but, at the same time, to also make your own decisions. Because it is your money which is at stake, you are the right person to decide what is right or wrong for you.

Do you Need Help with Your Investment Decisions?

If you have not seen any gain despite adhering to the rules of the trade, you probably need to go the extra mile. Wondering how to do it? It’s simple – all you need to do is join Priscillian Order – the best trading club to gain more returns and expertise simultaneously.

The best trading club is spear-headed by Mr Porschay Persh, the architect of ingenious investment strategies, whose guidance has transformed the lives of many successful investors.  You can rest assured his vast knowledge, coupled with the use of modern techniques, will give a fillip to your investment efforts so that you are able to achieve your goals. Why wait any further? Join Priscillian Order now!