Lesson 1 Learn To Understand Trading and Investing

 

In life, we all make mistakes. When investing in, some beginners will take huge risks and learn difficult methods. Some people will take a thoughtful approach and learn simple methods. Although errors can help you learn as an investor, they can also jeopardize the future of your investment. It is important to know what not to do when you start investing. In order to make you a successful novice investor, please avoid the following five common investment mistakes.

Learn From The Mistakes of Newbies Investors

I Don't Understand Trading and Investing

Many new investors don't decide their investment strategy in advance. Beginning investors can be divided into two main categories: traders or investors. Although both trading in stocks and investing in stocks are common forms of investment in the stock market, their execution methods are different. Trader is an active investor, quickly buying and selling stock positions for profit. One way for traders to be successful is to earn a higher profit rate.

A trader who makes a profit on 60% of the trades does a better job than a trader who makes a profit on 30% of the trades. For traders, another important factor is the risk-reward ratio. If traders buy and sell positions with high potential gains and low potential losses, they can get higher returns on average. Long-term investors use different strategies than traders. First, investors cannot buy and sell stocks quickly. It is the long-term purchase and holding of shares, long-term investors will use more of the company's financial information to determine whether it is a good action. This includes looking for companies that increase profits over time and sell them at a favorable share price. Long-term investors will purchase a diversified portfolio of company stocks and seek to expand that portfolio in the coming years.

If you start investing without defining yourself as a long-term investor or trader, it is difficult to use established strategies to be successful. If you decide to trade stocks and make long-term investments at the same time, you can divide your funds into two categories and manage each part according to your strategy. Next we will be discussing Lesson No. 2. To be continued...