Whether you are a value investor or a growth investor whatever your style of investing
, in the end it's you trading discipline that is going to make you a fortune. What you need is a set of rules that tell you what stocks to buy, what stocks to sell and when to do it. Plus you need the discipline to apply those rules consistently.
Do you dream of discovering a killer stock that will make you rich? Or you're not sure of how many stocks you should have in your portfolio. Or you buy one stock after another as if you are a stamp collector. Or you buy a stock without knowning exactly when you are going to sell it.
If you make these fatal mistakes than what you need is a set of ironclad trading rules that can be applied consistently. Let's discuss the three most important mistakes any investor can make while investing in stocks.
#1 Fatal Mistake: Falling in love with a stock! I ask you a question why do you buy a stock. Simple to make money many would say. Right but in reality you buy a stock to sell it. It doesn't matter whether you bought the right stock at the right time. What matters is did you sell that stock at the right time.
Now most of the investor when they buy a stock start loving it and can't think bad about it. But your stock is just a piece of paper that doesn't care about you or your retirement savings. Loving a stock is going to break your heart one day when you will discover that your love has not been returned.
You donot need to marry a stock. When you buy a stock, you should know exactly when you are going to sell it. In other words, when you buy a stock, you should know at what price you are going to sell it or you should have a good exit strategy if the it doesn't go the way you want.
#2 Fatal Mistake: Buying stocks with strong fundamentals! You can find hundreds of stocks with strong fundamentals. But only a few will have their share prices climbing. You can ask why? Because fundamentals have nothing to do directly with the share prices. Only one think can make the stock price move up or down; it's demand.
#3 Stock Investing Fatal Mistake: You waste your time searching for an undiscovered stock that can make you rich! Now to tell you the truth there is no undiscovered stock in the market. Wall Street has got thousands upon thousands of highly paid market analyst that do exactly that search for undiscovered stocks. As a small investors, you can't beat them. Because it is there job and they are paid to do it daily!