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7 traps that lead to bad investing decisions

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1. Giving in to fear and greed
Emotions cause you to flee a bear market and plunge head first into a bull market, acting directly counter to the investment adage, 'buy low, sell high.'

2. Being overconfident
People with an inflated sense of their ability to make smart investments often take shortcuts and don't fully think decisions through.

3. Looking backwards, not forwards
Тhe investors often have a bad habit of dwelling on the past, and talking about market developments as if it was obvious what was going to happen. The reality is that it's never obvious.

4. Relying on data mining
"Data mining" means studying historical market patterns and using them to try and predict the future. As seasoned investors know, making any kind of prediction is impossible.

5. Anchoring
That's the practice of mentally locking in a stock that has become irrelevant. It doesn't matter that a stock you bought at $30 is now trading at $10. It's no longer a $30 stock. Embrace that reality and realign your approach accordingly.

6. Doing mental accounting
Investors often fool themselves into thinking that they're doing better than they are. It's human nature. So it's important to keep track of how you're doing on paper, not in your head.

7. Sticking with the status quo
We have a natural aversion to change that can get in the way of successful investing. In order to be successful, you need to be able to recognize when things aren't working, and adapt accordingly.


 Trader Georgi Bozhidarov

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