The term stock market causes quite a mixed reaction in our minds. Do you know why do people lose money in the stock market in the USA or in other countries? Half of our minds are shaken by the fear of loss and the other half by the excitement of profit.
The pain of losing money is excruciating. Those who have lost money in that market can realize this pain. Many people ask why people lose money in the stock market. The main losers here are those who come to the stock market without realizing it.
Almost all countries have stock markets for the privilege of investors, where security or bond to various businesses is sold. Profit and loss are common here.
However, in this case, some markets have more notoriety. In this article I will discuss exactly what are the reasons are there for losing money in the stock market. I believe that new investors will be benefited greatly if they read the article.
Buying shares in excitement
Some traders buy shares in the hope of making a profit in the market. They may also have been hit by market rumors. Such people are in danger of buying shares thinking they will get rich quick. If the shares are bought under excitement, the chances of making a profit on those shares are very low.
It can be said that there is a gain by coincidence otherwise most of the time there is a loss. New investors are always more excited about the stock market.
Conducting no research
Research is worthy everywhere. If we research before making any decision, that decision is more likely to be right.
The stock market also needs to be researched before buying any shares. New investors do not want to do market research. They don’t even research the stock they will buy. Just a few days or a few hours after buying the stock, they realize that the result is not very pleasant.
Different ways of researching stocks are now at hand. Various information and charts are now also available in business reports.
In addition, images are created on a computer or website based on daily market behavior.
They have to make a decision after analyzing the data and generally they understand it later. Even if they understand it, the money is lost by then.
Selling shares at a wrong price in panic in the falling market
Panic weakens people. When the bear came down, the people panicked and lost their way. Some make wrong decisions, some run away, some lose sense.
The same thing happened in the stock market while market is bear. New investors are panicked when share prices fall in the market.
Then they think that since the price has fallen it means the disaster has started. And so they try to reduce losses by selling shares.
But they do not try to understand the reason why prices are falling. Is the reason for the reduction in prices whether a matter of fundamental or temporary correction of the market.
Consequently, the price may increase from the day after the sale of shares. But the damage is done by then.
Trying to make up the loss of another stock in a new trade
When the price of a purchased share goes down, many people start buying new shares to make up for that loss. This is also a fatal mistake.
At that time, new traders usually do not have the right knowledge. They buy whatever they want. They do not know which the most beneficial stock is. The result is a loss on all shares.
Remind it, the stock market is a place of risk.
Going into the stock market with borrowed money
Most experts say it is foolish to come to the stock market with the borrowed money.
Their opinion, it is so dangerous to come to the stock market with borrowed money that this danger can later reach the risk of death. Why does this happen?
This is because the new trader is in a hurry to repay the loan and pay the interest on the money by buying shares of baseless companies. Furthermore, if the time comes to pay off the loan but the shares still do not make a profit, then the shares have to be sold at a loss.
If the amount of loss is high, the unfortunate trader cries after dragging the burden of this debt for a long time. In markets where leverage is high, there is a risk that the entire capital would be lost. And if that is the case, it brings a great danger for the trader.
Investing the whole money together
Economists say that all the money that is available for investment should not be invested together. If the whole money is invested together, then if the 1st trade goes wrong, there is no chance to do another trade. It is because; there are no more dollars in hand.
Such incidents are caused by greedy traders. Most of them are new traders too. If necessary, talking to an investment advisor to reduce the loss. In this case, the financial consultant may take some fees which are the percentage.
I know that professional investment advisors provide very good services. New traders don’t even go to them.
Investing without planning
Planning is half of any job. So if you want to get success in any work, you need to make a good plan for it first. You also have to plan for investing in the stock market. Such as how long a share will be purchased for. Even if it is a loss, you need to have thoughts and plans to get out of it or not.
But new traders do not know how to plan this. And as a result of investing without planning, they face losses. Money typically Loses in the stock market.
Going to invest in a manipulated market
There are some notorious stock markets. Where almost everyone trades based on rumors rather than the true basis of the company. The regulatory body does not take any action to prevent this. The government also does not bother about buying and selling these bad shares.
Companies also produce four reports a year with false information. Different groups do inside-trading in the market. They increase the share price abnormally and sometimes reduce abnormality. Market index moves at their behest.
Such markets are more common in undemocratic countries. These markets are also seen in countries where corruption is tolerated and where there is no rule of law.
By investing in such markets, new investors do research and buy the wrong shares. The value of their shares is determined by their own fate. Readers of financeclout.com cannot support such a market. Trading in such a market means going to a robber voluntarily to lose own money.
Not having the habit of investing
There needs to be a habit of investing. With which there is a relation of savings. A portion of the income is saved and the investment is achieved by building a good portfolio by buying shares of different companies and different sectors through the stock market come to a full meaning of personal finance.
New traders suffer because they do not develop this habit. It is because, newcomers rush for dollars of profit.
The dollars they invest do not come to the market for investment purposes. They bring money from other sectors here to get rich quick. It is not ultimately pleasant for them. They lose money.
Read: Which Shares to Buy Now in India?
Last words
Despite the huge risks, I think a second market has not yet been a better than the stock market to increase dollars and wealth. Only through the stock market you can become the owner of a world famous company.
The companies owned by brands like Google, Facebook, Cisco, Tesla, Nestle, Apple etc. are only available in the stock market.
Buy shares of a company that has the potential to do good business in the future if you want to recover losses or reduce losses or avoid losses. There is no substitute for market and company research to understand this.
If you have any other reasons for losing capital in the stock market in your head, you can let the readers know by commenting. Attempts to answer any questions about personal finance are made at financeclout.com; we love to get email with your questions.