Reason People lose Their Money on Stock Market

Many people invest their money on stock market but why there is some bright mind stay ahead of others and they make more money than losing there are basic concept of timing and experience that lead to successful trade and here is how all wind and loss happens:

Every price of stocks of a company moves like a ripple in water it goes up and obviously goes down lets name it level 1,2,3 and level 4 respectively.

Level 1

Let assume a stock price of a company ABC is showing heavy downturn for e.g. like it was trading on 150 but have slipped to just 130 which is 20 points down at this stage newbies who have invested their money can’t resist their losses and start selling off their share as they were holding in hope that stock will rise and due to their aggressive selling stocks goes down again to 110 further 20 points down.

At this level where everyone is at panic this is where smart investors steps in with their dollars while other showing no interest on this stocks this is where our level 1 has begun and it’s ready to see some big upstream.

Level 2

After going download hill stocks starts to get strong and show improvement and gradually rise up to reach our point called level 2 this is also a money making stage and most money are made on this level only but others still don’t trust on this uptrend and most of the people are those who have previously experienced losses on this stocks till now no newbies have entered the rally now and the people who are trading are experienced investors.

Level3

Now the stock of that company is at its peak and trading in good numbers at this point most of the smart investors are busy in selling their stocks and cashing of their money at this level where all smart investors are selling and getting out newbies are now showing interest in it and starts to pour their money on it and now you can call this point at level 3 as the equilibrium has reached.

Level 4

After the level 3, Investors who have invested at the peak point will going see a dramatic downfall at this level one should just leave out this dangerous stock new investors holds there stocks assuming that the market will rise but the market has no signs of upstream now as the upstream rally has ended and they have missed the golden chance and the only thing at this stage the stocks can go is just downside at some point new investor will lose hope and will sell off their stocks with heavy losses and this is where our level 4 ends but it’s also the beginning of level 1 and all thing just repeat all over again.

Photo By MJ/TR (´･ω･) of flickr license by creativecommons.org