Common retail investors are prone to making mistakes in investment.

Common mistakes made by retail investors in investment mainly stem from lack of experience, emotional trading, and insufficient understanding of the market. Here are common investment mistakes and suggestions for improvement:

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1. Lack of a clear investment plan

Issue: Many retail investors do not have clear investment goals, risk tolerance, or strategies, and they trade casually.

Improvement: Develop a clear investment plan, including fund allocation, target profit rate, stop-loss points, and exit strategies.

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2. Chase high and kill low

Issue: Eager to buy (chase high) when seeing a stock skyrocket, and panic sell (kill low) when it drops, leading to a vicious cycle of buying high and selling low.

Improvement: Avoid emotional trading, follow technical analysis and fundamental analysis, and learn to think in reverse.

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3. Frequent trading

Issue: Retail investors frequently buy and sell due to short-term fluctuations, incurring high trading costs, and easily missing out on long-term trend gains.

Improvement: Focus on medium to long-term investment opportunities, reduce unnecessary trading frequency, and follow the principle of 'less is more'.

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4. Ignore risk management

Issue: Many retail investors do not set stop-loss orders or invest most of their funds in a single stock, resulting in huge losses in case of failure.

Improvement:

Diversify investments to reduce risk of individual stocks.

Limit the risk of each trade to 1%-2% of total funds.

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5. Only listen to rumors

Issue: Retail investors are prone to believing so-called "inside information" or hot concept rumors, but these messages are usually delayed or unreliable.

Improvement: Think independently, do more research, avoid blindly following the trend, focus on the company's fundamentals and industry prospects.

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6. Not understanding the power of compound interest

Issue: Many individual investors lack patience and always hope to achieve huge returns in the short term, ignoring the compounding effect of long-term investments.

Improvement: Understand the power of compounding, choose high-quality stocks or index funds, and hold them for the long term.

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7. Ignoring Fundamental Analysis

Issue: Only focusing on technical analysis or short-term Candlestick patterns, neglecting the company's financial situation and industry position.

Improvement: Learn to review financial statements, profitability, and industry trends to avoid buying stocks of companies with deteriorating fundamentals.

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8. Greed and Fear

Issue: Being overly greedy when the market is rising, overleveraging; being too fearful when the market is falling, cutting losses and exiting.

Improvement: Stay calm, follow trading discipline, allocate positions reasonably, and strictly adhere to stop-loss and take-profit strategies.

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9. Investing in unfamiliar areas

Issue: Blindly chasing unfamiliar industries or concepts (such as new energy, AI, etc.), without in-depth research, leading to investment mistakes.

Improvement: Only invest in industries that you understand, do enough research, and avoid "buying without understanding".

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10. Ignore market cycles

Issue: Retail investors often buy crazily at the peak of a bull market, but panic and sell at the bottom of a bear market.

Improvement: Understand the laws of market cycles, stay rational in bull markets, and seize low opportunities in bear markets.

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Summary

Ordinary retail investors need to avoid investment mistakes by cultivating independent thinking, discipline, and patience. By studying fundamental and technical analysis, developing a clear investment plan, and managing risks reasonably, they can profit more steadily in the market.