According to Fintech Expert Alessandro Rocco Pietrocola’s experience some of the mistakes you might make when trading stocks are actually pretty common, so he classified them for you.
1) Lack of financial education
Before starting to invest you have to learn about finances, read guides, or hire a professional financial expert. Also, if you are familiar with a business niche you are investing in, you will have a bigger advantage over most investors. Educate yourself as an investment you make in yourself will pay you dividends forever! The world of finances is very complex and in order to invest smartly you have to be aware of money nature, basic principles of economy, trends, history, etc. Your investment strategy should be based on provable scientific principles like diversification, asset allocation, valuation, correlation, probability, and much more.
2) Passion to earn money
Based on wide experience in trading and investing, Alessandro Rocco Pietrocola can assure that the appropriate mindset is the key factor to invest wisely and have benefits in the long term.
Investing in stock only with one idea – to gain money is a very risky thing. Thus, you expect too much, you are too emotional, rather than rational, you invest your last money, making buy and sell decisions which you otherwise would have never made. You shall invest with an objective to wisely multiply your capital what is different than simply gain money on it.
3) Follow the crowd
Generally, people buy shares when a company has already performed well. It happens usually after the stock has reached its peak. The investment is overvalued by this point. Investing in a trend without analyzing is not a good move after all, because, if everyone is buying, you’re already late.
4) Not to pay importance to Due Diligence
Due Diligence is a very important stage in the investing process, but many investors don’t pay much attention to it. A company with a «good concept» like fabricating a cure of cancer is not enough to make a decision in its favor. Such a company can easily be bankrupt in a year. Every investor shall be aware of every potential risk of the company to avoid potential loss. Only proper Due Diligence will help you to be aware of all these risks.
5) Put everything in one basket
To minimize all risks experienced investments usually distribute their investments into different classes of assets. Stick to the principle of asset allocation. How to allocate assets in an optimal way? Distribute your funds into different asset classes (stocks, bonds, cash) according to market, preferences, risk tolerance, age, whether you are going to retire soon or not, capital you possess, etc. It is also recommendable to analyze profit and losses from time to time and if needed, rebalance allocation.
It is better to start with simple investments such as mutual funds or ETF’s exchange-traded funds are a good first step, before moving on to individual stocks, real estate, and other alternative investments.
Alessandro Rocco Pietrocola is an entrepreneur and investor based in London and operating mainly in Europe, Asia and Oceania with main focus on the UK, Baltic Countries, Russia, China, Hong Kong, Malaysia, Singapore, Middle East, and New Zealand as an area of interest! At the moment is the Ceo of Astorts Group. He is a UK FCA (Financial Conduct Authority) Approved Person and is has great experience as director of regulated companies. He uses to dedicate part of his life to inspire others and help them achieve the most out of their life. Since he was 20, he had successfully founded and managed several companies operating in the field of management consulting, wealth management, and fintech. He loves traveling, he is a cigars lover, an amateur golfer, and a dapper man.