Common mistakes in stock market - Traders & Beginners

Most beginners in the stock market are dreamers, who always see people around them turning rich. People discuss on stock market trades like Facebook feeds, only talking about their success stories. If you are one of them and planning to enter the stock market avoid below mistakes or assumptions. 

1. Power of Compounding: Popular miss-selling technique used to market equity. What is Compounding? It is the ability of an asset (your money) to generate earnings, which are then reinvested in order to generate their own earnings. PPF and FD are famous traditional compounders. 
2. Selecting brokers based on ads: During my initial days of trading in the stock market, I had made more money for my broker than myself. It was due to a lack of brokerage knowledge and also because brokerage is charged on both profitable or loss transactions.
3. F&O trades: Futures and Options trades are techniques which need expertise. People doing trial and error in it are usually found selling their and their one's assets to repay losses. 
4. Trading on Margins: Margins can help you generate higher profit and higher losses too. So use it wisely, personally, I would suggest to avoid it.
5. Not understanding the benefit of SIP: Systematic investment plans help you to invest a fixed amount on a monthly basis. This helps you to generate a huge corpus for long tenure goals. (Rs. 2000 invested monthly for 30 years can generate Rs. 1.3 crores @15%). 

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