I am not a stock market investor in any great sense even though I have considerable holdings. [pullquote]Stock markets are driven by emotions. But whoever plays emotionally always lose the war, he might win the battle.[/pullquote]What I have learnt from my experiences and experiences of people in my vicinity, the greater mistakes stock investors make are as follows.

  1. Emotional Decisions : Stock markets are driven by emotions. But whoever plays emotionally always lose the war, he might win the battle.
    1. Emotional buying : This stock looks cheap.Cheap is best.Let us take it.
    2. Emotional selling : Every one is running out of the stock.Let me also lighten up.[pullquote]The job of TV channels is to justify whatever is going on.They always have two types of panelists. Bulls and bears.They keep calling favourable panelists to ‘justify’ market action.[/pullquote]
  2. Listening to analysts on TV or active media : I have seen no greater folly than this. TV analysts are mere commentators.They react to situations and cannot always analyse the situation with calm mind.The job of TV channels is to justify whatever is going on.They always have two types of panelists. Bulls and bears.They keep calling favourable panelists to ‘justify’ market action.
    1. In any business news channel, if you carefully listen and follow all analyst,in the course of one week only you can find contradicting advises on same stock!
    2. Mind has a ‘conformation bias’ and ‘recency bias’. We tend to find reasons in support of our actions.[pullquote]People following those ‘head and shoulder’ patterns and ‘candle’s’ are greater losers in share market. Why? Because market are driven by emotions and emotions have no fixed pattern.[/pullquote]If I have taken a ‘call’, I will seek reasons to support the fall of market or share!.They supply all reasons to all people.Just like a ponzi scheme, half of their viewers are always happy!
  3. Bull shit of technical analysis: People following those ‘head and shoulder’ patterns and ‘candle’s’ are greater losers in share market. Why? Because market are driven by emotions and emotions have no fixed pattern.Many analysts are seen on TV saying that ‘As chart will change,our advice will change!’. My nine-year old son can easily give advice to ‘short’ a [pullquote]Shares move in cycles.They jump once or twice in a year.They often have a spree or long run once or twice every five years.You cannot have your share jump 20% as soon as you buy it.[/pullquote]share with stop-loss around 10% up!
  4. Frequent buying and selling : How many you have yourself yelled like ‘Ohh yes Bank was on 600 and see it crossed 1000 now.I sold at 760/-’. I have a trick of this bullshit. I have frozen 50% of my shares for five years.I also froze other 50% for at least one year (LTCG).Shares move in cycles.They jump once or twice in a year.They often have a spree or long run once or twice every five years.You cannot have your share jump 20% as soon as you buy it.It is advisable to buy on rumours but always sell when time is right.Minimum investment horizon is 3–5 years.For that freezing is really great option.You have to manually go to head office of your broker in your city to unfreeze it. Nobody goes.[pullquote]Have a clear focus and goals before you enter into markets. Trade when you trade and invest when you invest.[/pullquote]This is the best trick which I learnt while investing.
  5. Mixing trading and investing : Many readers will agree that the two are all different ball game.It’s like ‘one night stand’ and ‘marriage’. Do you ever mix the two in life? Don’t do in market also. Have a clear focus and goals before you enter into markets. Trade when you trade and invest when you invest.
  6. Not following ‘stop losses’ while trading : Nothing more can be said about this more. We are again based by our mind.We perceive loss twice as painful as gain.Hence to avoid [pullquote]Future and options have a primary purpose of hedging your losses.You can gain nothing out of it. Future and options is a high stake game and often very big players are involved in to it.The sharks are so big that they can shake the ocean if required.Avoid futures if you don’t understand it very well.[/pullquote]losses we keep on waiting and in the end incur greater loss.
  7. Future and options : I haven’t seen more people burn their pockets by this ‘options’ trading than all things combined in financial markets. I am yet to see a millionaire out of future trading. Future and options have a primary purpose of hedging your losses.You can gain nothing out of it. Future and options is a high stake game and often very big players are involved in to it.The sharks are so big that they can shake the ocean if required.Avoid futures if you don’t understand it very well.Options are designed in a way (In the sense of diminishing premiums) that it always favour the ‘option writers’.One way to gain money is to sell a future or sell a call or put.Since natural tendency of futures is to go down (As expiry nears), you have a better chance. Bu there is a caveat.You have to put full margin in lieu of selling a future trade!.You see that the most profitable option in ‘options’ is rigged to benefit the shark!.

Last few points of small investors

  • Avoid day trading on all costs.Better gamble in a bar.You have better chances there.
  • Do not invest for less than 3 years.
  • Sell your stocks if you have a profit of more than 20% in a near trade. No stock runs infinitely.People are happy 20% in a year but are not happy with 20% in a month!
  • Freeze your stocks.You can never trust your nerves.You will sell in impulse just like you ejaculate at climax in sex!.Money and sex are interrelated in ways more than one!

https://hemantpandeyblog.com/2018/08/28/7-dirty-business-tactics-do-you-must-know/