Why do people lose money in the Stock Market

    Why do people lose money in the Stock Market

  • 1 Buying overvalued stocks

    Under the effect of emotions such as greed many people buy overvalued stocks, hoping that they can make money if those stocks went even higher. Since overvalued stocks are more likely to fall those people can easily lose money.

  • 2 Lack of self-discipline

    Some people sell their stocks as soon as they fall a few percentage points, while others rush to buy some stocks as soon as they go up. This kind of lack of self-discipline usually leads to losses. See how to select winning stocks.

  • 3 Buying bad companies

    Many people buy stocks that belong to companies that are losing money or that have serious operational problems. Those stocks usually fall as soon as the earning reports are released.

  • 4 Buying in a bubble

    So many people rush into the stock market when it's already at its multi-year peak. In such a case, those people might lose a lot of money if this bubble bursts. See signs a stock market is about to crash.

  • 5 Short-term trading

    On the very short-term the stock market can be highly unpredictable. People who do day trades or who buy and sell stocks during a very short time period are more likely to lose money than long term investors. See why stock prices usually don't reflect the business value.

  • 6 Following the crowd

    One of the most popular reasons for losing money in the stock market is following what the crowd is doing. See why following the crowd is dangerous.

  • 7 Using technical analysis alone

    Many investors use technical analysis while ignoring the company's fundamentals and the economic outlook. Those investors are more likely to lose money than those who bought stocks because of strong underlying fundamentals.

  • 8 Buying on margin

    When a person borrows money to buy stocks he might be forced to sell his stocks at any time if their value went below a certain amount.

  • 9 Investing needed money

    When a person invests the money he might need on the short-term then he might be forced to sell at any point. In such a case, that person might sell his stocks with losses.

  • 10 No faith in the underlying company

    When a person buys a stock that he doesn't really believe in he might sell as soon as the price starts to go down as a result of fear or panic.

  • 11 Lack of investing knowlegde

    When a person doesn't get enough investing education he might follow the tips given by friends or family only to find himself losing money.