Stock market returns are necessary for financial freedom. Whether one is trader or investor one has to have his own strategy. Most of us focus on the reasons for achieving mega success in stock markets but it would be helpful to know the reasons for failure in stock markets so that one can avoid them while staying in stock market. These reasons are just a compilation which I found to be applicable for me as well as other people in stock market. The 17 basic reasons for stock market’s underperformance and failure are as follows:
1. Poor personality traits for success such as lack of discipline, impulsive behavior, luck dependency etc.
2. Poor money management, include overleveraged positions, too much money in single trade and investment etc.
3. Attachment to stocks even in wake of poor fundamentals or poor performance.
4. No stop losses.
5. No entry point strategy for the stock selected.
6. No exit strategy for invested stocks.
7. Investing/ trading on the basis of hot tips from brokers, commentators.
8. Over trading.
9. Not booking losses when necessary.
10. Not reading books, literature on investing/trading.
11. Not having own strategy suitable to one’s own personality.
12. Not open to changing the wrong strategy one is following.
13. Non-serious approach to investing/trading.
14. Not enjoying investing/ trading.
15. Too much knowledge and continuous monitoring leading to paralysis of action.
16. Over diversification leading to too many stocks.
17. Not upgrading one’s knowledge about his/ her investments.
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