Mistakes that I made in stock market & what I learnt from them.
Today I am sharing my experience in stock market as a beginner focusing more on the mistakes that I made and what I learnt from it. This will help you to understand avoid those mistakes & get kickstarted to be successful!!!!
“When you make a mistake, there are only three things you should ever do about it: admit it, learn from it, and don’t repeat it.” Paul Bear Bryant
1. Invested without knowing about the company-
When I got into stock market as a beginner I started reading and watching news to get all the updates and buying tips. So, once the news flashed on TV about a company called Punj Llyod who won order (in crores don’t remember exact figure). I got excited and thought it’s a good company and the share price will go up. I bought the shares around 30 in the year 2015. For couple of weeks months there was no much movement in the stock but gradually started going down. Seeing the price going down and loss widening with fear I finally sold the stock after holding for 1 and ½ year at 20 per share making 40% loss.
Back then I didn’t know anything about the fundamental analysis and technical analysis. I blindly bought just on one news flash without doing any background check of the company.
Later I realized the big mistake I made was not checking about the company financials, growth etc., not checking the technical. The price was going down as there were problem in company financials.
Let me show you in the below video.
I learnt that
- Having knowledge, checking fundamentals and technical and applying your own analysis before buying any stock is so very important.
- Not to buy blindly tips or just on one positive news given or recommended by any friend, colleague, neighbor, advisors, analysts etc.
Though I knew about stop loss and it’s importance I was somehow skeptical to use it – not willing to make even a minor loss and expecting price to only go up after me buying. For the first time when I did intraday, I didn’t put stop loss and unfortunately the stock went against me and started falling. I still kept holding for entire day thinking will go up in sometime and finally it got auto square off losing 3000 in a day and losing my confidence too. Lack of knowledge, greed, fear, ego played major role for the loss!!
I realized and learnt a lesson that
- Stop loss is a must especially in intraday. Intraday trading is already risky and becomes riskier without stop loss. Stop loss helps to control our emotion – fear which is very important to be successful in stock market.
- Doing technical analysis is must to enter right stock for intraday to increase probability of success.
3. No Control on emotions – fear and greed –
As a beginner I used to buy shares based on tips given in TV channels, news and few advisors too. I then didn’t do any technical analysis as had no idea and knowledge about it hence had no target set and stop loss set. I used to just wait for the price to go up. Sometimes I booked profit. But most of the times I held the stocks both which were in profit assuming it will go up further (greed) and the ones which were in loss assuming someday will go up (fear of losing money). Finally, I was earning too less and losing more.
I realized and learnt that
- Greed and fear are the natural human behavior of every trader and investor in stock market but to gain confidence and be successful in stock market this behavior has to be changed.
- Being fear and greedy is in fact very good. Only it needs to be controlled and used at appropriate place. Had I been fearful of losing the profits earned than been greedy I would have been in more profit.
- The mechanism to control this natural human behavior is the technicals. In technical analysis we have stop loss (to stop your loss to minimal) and target price (sell at this price) which automatically and easily takes care of your greed and fear.
Fundamentally, as Warren Buffet says “Be fearful when there is greed and be greedy when there is fear”. In short, he means buy when the market is falling and sell when the market is up.
4. Not doing a course
I learnt by watching YouTube videos and other articles which took lot of time as the free learning available is all in pieces and need to join the dots or like a puzzle to get the complete understanding. This was not worthy considering the time taken and opportunity lost in earning in stock market early.
As they say “the early you sow the early you reap"
I realised
- Had I been learnt through a complete course well before I would have started earning much earlier as market goes through different phases and spending time on this to get that practical experience and learning is much more worthy!!
- Again paying for a course is not spending in fact it's an investment which will get back with returns!!!!
As they say
"An investment in knowledge pays the best interest" -Benjamin Franklin
"If you want to reap financial blessings you have to sow financially" - Joel Osteen
I hope sharing my experience will be helpful for you and a learning too in your investment and trading journey!
Stay Safe, Stay Invested, build on to your confidence and don’t lose one!!
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