Following points are fundamental concept that you need to know in to minimize risk of losing money in stock market;
- Keeping hold of bad/loser stocks
You need to be aware about the stocks that you are holding. There are many investors, who take profits by selling their valued investments, but they keep hold of stocks that have begged off in the hope of a return. If you do not know when the right time is to let go of hopeless stocks, then you may be in the worst-case scenario. You may see the stock sink to the point where it is essentially worthless. The best way to remember the great theory is that you must hold onto high-quality investments and sell the poor ones. However, this is hard to put into practice.
- Blindly following tips given by your close people
No matter whether the tip comes from your brother, or your neighbor or even your broker, you must never accept it true, unless and until you find the logic behind that tip. If you have made an investment, then it is important to know the reasons for doing so. You must be able to do your own research and analysis of any company before you even considers investing your hard-earned money. You cannot just simply rely on a tidbit of information from someone else. This is not taking the easy way out. Trading is also a type of gambling so you need to be sure with some luck. However, the bottom line is that you need to be an informed investor, which is what you need to be to be successful in the long run.
- Running after new strategies every time
Everyone uses different methods to pick stocks and fulfill investing goals. In actuality, there are many strategies that help you in becoming a successful trader but no one strategy is essentially better than any other. The moment you get to know your style, stick with it. If you flounder between different stock-picking strategies then you will probably experience the worst rather than the best of each. If you will keep on switching strategies then it will effectively makes you a market timer, and this is definitely territory most investors should avoid.