Harmful tips for novice investors, or how to stay out of earnings for sure

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YEREVAN, 27 August. ARKA. Many of the novice investors are motivated people who have already achieved success in other fields and rightfully praise their abilities. They are able to analyze information and exercise discipline, and see the market as a huge platform of opportunities and interactions. This is an interesting new world, in which a smart person, as it seems, will definitely be able to earn money./pp

The novice investor immerses himself/herself in the topic, seeks out experts, tries to replicate or create a working mechanism. As a result, the novice gets a huge amount of data and with it, a string of misconceptions Let's look at some of the misconceptions that cause investors to fail./pp/pp iInvest the last of your money or borrow it - it will all pay off later /i/pi /ip

Investing when you have no money to spare is too risky and impractical. If you manage to make a profit right away - which is also not guaranteed - you will have to pay commissions to brokers and managers, repay your debt or repay your loan. Even an effective strategy does not exclude short-term drawdowns. So, in case of market losses, you risk finding yourself in a debt trap./pp iMore trades - more profits /i/pi /ip

The over-motivated novice investor follows the belief ‘the more active you are, the higher the chances of success’, because it often helps in career, studies or hobbies. However, in market conditions, this principle can create a negative effect. Here, the ‘risk premium’ does not always increase with the amount of effort invested./pp

Often novice investors expect instant profit, believing that in their particular case the market should reward the invested money and efforts. In reality, however, sustainable growth is achieved and reinforced over time. Investors who fail to manage expectations succumb to emotions, abandon strategy and follow others./pp iPut everything under the control of the manager /i/pi /ip

Fearing their own inexperience or not wanting to waste time, some investors hire professionals and completely disconnect themselves from the process. This is a dubious approach that speaks of a person's indifference or naivety. And sometimes such novice investors ‘attract’ non-professionals and fraudsters, which turns out to be a loss of money for them./pp img width=669 src=/upload/medialibrary/923/923fb6b410501cf8d877d84152904fa6.jpg height=445 title=фридом alt=фридомbr/pp iIf you suffer losses, change your strategy or stop investing /i/pi /ip

It is not the losses themselves that ruin the investment process, but the wrong reaction to them. Losses are the realization of the risks you take when you start your journey in the stock market./pp

Declines are inevitable with any strategy. In some cases, the assets themselves become losses because the company's management or portfolio owner made bad decisions. But often the downturns are a reflection of many factors beyond the individual's control, such as the international situation, manipulation by major players, etc. The investor should assess the situation and take a step back./pp iIn a falling market, you have to get back on track right away /i/pi /ip

Overwhelmed by losses and the desire to ‘make things right’ as soon as possible overshadow rationality. In a stressful situation, it is much easier to find pseudo-solutions and even theoretical justifications that fit the desired answer. As a result, the investor becomes a dependent player who continues to spend./pp iBe aggressive /i/pi /ip

Investors immediately set goals to ‘use’ the market to make their own money, although you need to research the market first. Ask yourself the questions, ‘What is the market anyway? How does it work?’ These are the ones that are paramount, although they may seem naive at first./pp

The feeling that you have studied the market patterns in depth enough to make a correct prediction is deceptive. By nature, people tend to overestimate their own capabilities and underestimate the level of competition./pp

In reality, a private investor, especially an inexperienced one, is weaker than the big players - organizations and professional traders. They have command of much more data and opportunities. This understanding is the key to ‘getting back to reality’. Find your potential weaknesses and always think about the appropriateness of the steps you are taking in a particular situation./pp iRead a textbook - you will understand everything at once! /i/pi /ip

The authors of some books and courses promise to describe a universal recipe for success, to give a certain ‘code for breaking the market’. They draw conclusions from their own experience, and this convinces novice investors that it is possible to follow a strategy that has worked and avoid other people's mistakes./pp

However, success is based not so much on the method as on the experience - the path that led to the method. The investor gradually gains an understanding and ‘feel’ for the processes he or she relies on when making decisions. You can take someone else's answer, but you will not learn to think the same way./pp

Besides, even if there were a universal scheme for success, the market would quickly supplant it by learning to counteract it./pp iLook for insider information /i/pi /ip

Financial institutions hide data about their internal processes that can seriously affect investor behavior, cause a collapse and give some players an advantage over others. Insider information is described in legislation and company documents./pp

Top managers and employees who have access to such data file additional reports on their actions. By manipulating the market with insider information, they become criminals. The same is true for investors who ‘buy’ non-public data. The penalties for violators can be severe, up to and including imprisonment./pp

However, it is useful for investors to pay attention to the legitimate transactions of owners and top managers, because they see the situation from the inside. Do not take the steps of managers as a guide to action, but take them into account. There are special portals where reports on transactions of top managers are published./pp img width=669 src=/upload/medialibrary/617/617e0e181a4362512744b4da79a1acf8.jpg height=445 title=фридом alt=фридомbr/pp iAbandon savings in favor of investment /i/pi /ip

Savings and growth strategies need not be seen as mutually exclusive. By choosing a risk-free rate, you will preserve the value of your money and build the financial cushion you need in an unforeseen situation. Investing aimed at capital growth is a fundamentally different approach. It will require more knowledge and involvement. Buying securities can bring good additional income, but under negative circumstances, there is no guarantee that even the initially invested funds will be preserved. The right thing to do is to take care of both the accumulative and profitable parts of the capital./pp iEnter a stable market only /i/pi /ip

You really cannot make hasty decisions in the market. However, caution should not erase the line of realism. The market is not a completely safe and predictable platform, because its main principle is the relationship between risk and reward. A shareholder accepts discomfort in times of decline, giving money now for the sake of profit later. The company, in turn, receives funds and pays for patience. The element that brings balance between risk and reward is the asset price./pp

Even a thoughtful approach to anything, including investing, involves some degree of comfortable assumptions. It is important to recognize in advance what attitudes can mislead you and monitor them in yourself:/pp

- Overestimating your capabilities/pp

- Expecting perfect conditions/pp

- Searching for a universal ‘key to the market’/pp

- Acting ahead of understanding/pp

- Ignoring potential threats/pp

- Complete trust in other people/pp

- Not recognizing one's own mistakes./p iThis material was prepared within the framework of the joint project ‘The Year of Investing in Oneself’ by ARKA, AMI Novosti-Armenia news agencies and a href=http://ffin.am/en/Freedom Broker Armenia/a./iinbsp;/i