When a beginner investing in the stock market gets started, they can and will make mistakes that can hurt their portfolio. Some mistakes can be worse than others. One of the biggest that beginners make is one that they might not even realize; chasing a stock.
Chasing a stock is a common mistake you need to be aware of, or your portfolio will take a beaten. This is when a stock had some good news come out and you missed the information when it was first released. In other words, the stock price made some good gains and you didn’t take advantage of the situation. I’ve seen stocks jump in value by over 30% and watch other traders try to guess at if the price would come back down temporarily so they could jump in. As the price goes up, they try to stay near the low end of the trading range, hoping for the pull-back. When the pull-back does come, it comes in the from of profit-taking from other trader and investors that got in on the initial news.
This can also take place over a period of a couple of days where the stock price jumps as much as 100% or better, only to have it come back down to levels of the original price before the move up.
Just because the stock price has moved up in a relative short period, doesn’t mean you should jump in for a quick gain. The traders that do that are very experienced in investing and this practice should be left for them to do. Any stock that you are planning to get into should be one that you’ve researched. You should be very familiar with it’s balance sheets, as well as other financial information in regards to the company. If not, take some time to check out a stock market site for information. You can never do enough research.
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Thanks for the info. I wish that I had found this before I started trading stocks. It would have helped me avoid making the errors that I did. Oh well, at least others won’t have to go in alone. Good job.
From reading Beginner Investing – The Chase I think that I’ve learnt a little bit more of very useful information on the stock market. Jumping into stock that has gained a lot isn’t always a good idea because it can go down very quickly and all new stock market traders should know this and thanks to this post your helping people know.
Hi My friend thanks for the Great info you give us i also do trading but i dont know that much about trading…thanks for the info it really help me and i hope we will see more stuff like this in future from you…
Well these articles are very useful. I read them all and as a beginner in internet marketing I can take advantage of them. Keep up the good work by posting more information and useful tips.
Thanks for this great tip! I wish I could have seen this post when I started trading stocks as I made this exact mistake! Keep these posts coming, they are great!