3 Fatal Mistakes In Stock Investing

It doesn't matter if you are a growth investor or a value investor, in the end, your trading discipline will decide your fortune. You just require a set of rules to assist you in deciding as to which stocks to sell, which stocks to purchase. You may also require a discipline for application of these rules religiously.

Do you have a dream of finding a great stock which will turn you into a millionaire? Are you not sure of the stocks you should have in your portfolio? Or are you just buying one stock after another without any thought.

These types of fatal errors are made by the small investors almost regularly. You need to formulate some set of investment rules which should guide you on which stocks you should buy and which you should sell.

Here we discuss three very critical mistakes which small investors usually commit!

#1 Fatal Mistake: Always in search of that undiscovered stock! This is just a dream of every fresh investor, to discover some startup company whose stocks he can buy in the pennies and then when it climbs to hundreds of dollars he could make a killing on the profits. Well, let me tell you one simple truth, there are hundreds of well paid stock analysts in the Wall Street who are just on the job to discover that undiscovered stock! So where do you stand?

#2 Fatal Mistake: Investors simply fall in love with the stock they buy! Stock is just a piece of paper which is bereft of any feelings. You may want to brag that you have this or that stock in you portfolio but is stock caring for all this? No. It will not care about your hard earned money or retirement savings. You should not cling to your stocks as their prices could nosedive and you could be in huge loss.

When you purchase a stock you should remain instantly prepared to dispose it off as soon as you get good profit. In short, you should have a nice exit strategy in mind which will never cause you any losses.

#3 Fatal Mistake: Always purchasing the stocks of the companies with strong fundamentals! Not all stocks with strong fundamentals will perform excellently. This is so because fundamentals are not important to pull the share price up. Only the demand can move the share price upwards or downwards.

Michael has been writing articles online for 10 years. Check out more about learning stocks.