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Some common mistakes which beginners should avoid while trading in stock market

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With its past few years performance stock market has proven itself a suitable medium from investment point of view. Also now it is not difficult to trade as using online trading facilities traders can trade easily and this ease has attracted more number of investors to invest their hard earned money in stock market. In a hassle free manner stocks which they trade in are stored in electronic form in their respective demat account .

To become a successful trader good patience and knowledge about market is required. Following are some common mistakes which beginners should be aware of and should avoid committing:

1) Putting entire fund in one investment

Market is of highly volatile nature and therefore investing entire fund in the same segment is never a wise decision. To manage risk and earn good returns traders needs to maintain a well diversified portfolio. Instead of investing entire fund in either stock, commodity, stock futures, bond try to invest some amount in few of them as per your capability. This well help in diversifying the overall risk and if in-case a particular segment does not performs well then others which are part of your portfolio will help to compensate the loss.

2) Investing on news

Investing on news is not a good choice for beginners. Those who are new to market should trade in stocks of companies which they are familiar with. Fundamental and technical analysis helps in understanding companies performance and what returns it is likely to generate. Make decisions on the basis of facts and not merely by believing on humors.



3) Low priced stocks are safe

It is a common misconception that low priced stocks are safe and helps in earning good returns.This is not true as a low price may signifies that company is not fundamentally sound and unable to perform well. Therefore study companies past performance and identify the reason behind its low share price before investing.

4) Investing cash which you can afford to loose

Carefully analyzing risk bearing capability is very important. Beginners often invest fund which they can not afford to loose in lust of earning high returns. Never get involved in trade which is beyond your risk bearing capability and trade with only that much find which you can afford to loose without facing any difficulty.


These are few mistakes which beginners of stock market tends to commit. When you start investing in stock market then do not get involved in high risk trades. Once you gain sufficient experience and understand how to deal with different market situations then you can go with high risk trades as well. Traders and investors can opt for discount brokers and save huge amount of brokerage and further use that money to trade more in market. Pehla Trade is a growing discount brokerage firm facilitates traders to trade at Rs1/executed order for initial one month. 
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