When you become interested in investing in the stock market, it's typical to begin considering which stocks to buy.
After all, it's often interesting to peruse companies to decide which you might like to own.
However, it's also critical to understand what not to do.
There are a number of mistakes that the most successful investors have learned to avoid.
Investors often learn through trial and error.
The goal, of course is to make money rather than lose money.
So it can literally pay to know some common mistakes to avoid.
First, only buy stocks of companies with a track record of profits.
Often, companies come to the attention of television commentators and magazine writers despite having no earnings.
Sometimes they come from a so-called "hot" industry or they make a product that captures the media's imagination.
But for an investor, it's important to eschew unprofitable companies because those stocks can be punished for even the smallest misstep.
If you happen to own shares, you can see them plummet in value very quickly.
Better then, to buy stocks of profitable firms.
These, too, can fall sharply on disappointing news.
But at least there is a history of earnings that have convinced investors of its future prospects.
That generally makes a stock somewhat less risky.
Number two, don't be afraid of selling.
With any stock, its uptrend eventually comes to an end.
That could happen after the stock has been rallying for years, months, weeks or days.
But at some point, you will have to sell, if you want to keep your gains.
But investors are often afraid to sell.
They grow emotionally attached to stocks, as if they were people.
Don't let that happen to you! These are merely investments, vehicles for you to make money.
There's an old expression, "Don't marry a stock, date it.
" That applies in this case.
Stock ownership is not a lifelong commitment.
Only hold until a stock breaks its uptrend definitively.
Finally, don't be a day trader.
It's way too perilous to attempt market timing on an hourly basis.
It may sound like an appealing process for making money, but it takes a rock-solid risk tolerance to successfully day trade.
It's also very hard to time the market precisely.
Day traders have to consistently track the market, and be very knowledgeable of the securities they are trading.
In short, the risk factor of day trading is far too great for most investors.
It's possible for the average trader to lose a lot of money, very quickly.
Far better, is a sound set of buy and sell rules for either growth investing or value investing.
By avoiding these three mistakes, you'll have an advantage in the stock market.
You'll retain more of your paper gains, and be less worried about your investments.