When it comes to investing your money, there are 6 mistakes to avoid at all costs, in my opinion! There are actually hundreds of them, but I’ve tried to trim the topic down so you can start building the mindset — and maybe even the method — of a true investor!
This post is updated regularly, because if there were only 6 mistakes to avoid as an investor, we’d all know them already!
Investing Your Money | Mistake 1 to Avoid: “Easy Money!”
Ah, the classic mistake: thinking trading is like picking up banknotes off the ground. Dreams of a Lambo, a Rolex, and a luxury villa in Dubai. Some people think they’ll become millionaires overnight, convinced that trading is easy peasy and needs no training: “TO THE MOON BRO”
In reality, trading is serious business. It demands continuous training and constant work. A real trader isn’t just chasing money.
Their goal is to preserve their capital and make rational decisions based on their needs, objectives, and abilities. They know exactly where they stand and look to grow their capital intelligently.
Forget the idea of quick, easy gains. Focus on learning, from the basics to advanced strategies, so you keep evolving in your approach. The profits will come naturally, with patience and a methodical approach.
If making money has become relatively easy for you, it’s simply because you worked hard to make it happen. You make your own luck!
🧑🎓Learn to trade with my free courses
2. Investing Your Money, 6 Mistakes to Avoid: Trading Without a Plan
Welcome to the world of cryptocurrency trading, where the initial excitement can sometimes lead to impulsive choices! But watch out for those impulsive choices. Yes, gut feeling can win you money early on, but it doesn’t guarantee victory in the long run.
Without a solid plan, you risk making hasty moves when the market throws you a curveball — which unfortunately happens to beginners all too often.
Think of trading like an elite sport. It takes rigor and discipline to lift the trophy. A good trading plan should cover the trend, risk management, and the key moments to enter, exit, and take profit.
Today, you have the chance to test your strategy with demo accounts before playing with your own money.
In short, a well-thought-out plan arms you against the market’s shake-ups, so you never give in to panic — because you’ve already thought of everything!
📝 I’ll show you my trading routine for building a plan
3. Investing Your Money, 6 Mistakes to Avoid | Acting on Emotion
Greed and fear, the two buddies that can make you do anything. Greed pushes you to bet big even when the risks are high, hoping to scoop the whole pot. But one gust of wind in the market and, bam, you can lose big.
On the other hand, fear often paralyzes indecisive traders who haven’t done their homework and hesitate to make decisions.
Controlling your emotions is essential for trading safely and with confidence. It sharpens your judgment and your responsiveness when making decisions.
To help you tame your emotions and put them to good use, I’ve gathered most of my posts on trader psychology.
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4. Investing Your Money, 6 Mistakes to Avoid | No Risk Management
Picture trading without risk management as skydiving… without a parachute. There are tons of ways and techniques to avoid losses and maximize your chances of turning a profit, so don’t neglect them!
You need to adopt a positive, strategic approach to risk management. That includes using leverage intelligently, weighing the benefits of Stop-Loss and Take-Profit orders, and keeping a close eye on the number and the cost of your trades.
👉 Everything you need to know about risk management 👈
5. Investing Your Money, 6 Mistakes to Avoid | No Journal
Whether you’re a rookie or a pro, correcting your trading mistakes is crucial. Take notes on all your trades, the good ones and the bad ones alike. It’s a golden opportunity to analyze the ones that caused chaos.
If you neglect this post-trade analysis, your adventure on the market is likely to be a short one. Building a solid game plan for the next day becomes juggling without a net if you ignore and/or fail to understand yesterday’s mistakes.
Even if it’s not the most fun thing in the world, keeping a trading journal is a valuable tool for understanding your style — what’s likely to work in the future and what isn’t.
👀 Check out my tips and start your first trading journal 👀
6. Investing Your Money, 6 Mistakes to Avoid | Trading Against the Trend
Trading against the market’s trend is like playing hide-and-seek with the market. It’s especially risky for a beginner. Conversely, trading with the trends is “a little” simpler. You open a trade and keep at least part of it running as long as it’s making money.
The first step is to spot a trend. It’s not rocket science: look at the weekly and daily charts to see whether it’s going up or down.
Write the trend down in your trading plan, and you’ll see your game much more clearly.
📈 To learn how to spot a trend: Price Action Guide 📉
Investing Your Money | Mistake 7 to Avoid: Going All In!
Never put all your eggs in one basket, always keep at the very least one way out! We can never say it enough…
The same goes when you intend to throw yourself headfirst into a new activity. Beyond just diversifying, make sure you properly compartmentalize your investments.
Don’t be the Titanic: if one compartment floods, you need to be able to keep going stress-free!
Investing Your Money | Mistake 8 to Avoid: To Trust… or Not?!
Whether it’s a “guru,” a future business partner, or “worse,” a friend, never trust anyone who might be involved in your investment.
The (Half) Exception Is Technical!
If you’re interested in a sector and you have an engineer friend who works in that specific field, don’t run off in all directions: make a phone call first!
Likewise, if you have a website project, don’t hesitate to call a developer friend — they’ll help you clear the brush and sort out your ideas.
To clear the brush, the “phone a friend” lifeline is genuinely useful, but if you’ve got a good feeling and the sector you want to invest in truly interests you, then get your hands dirty. Train yourself and become your own advisor!
As a bonus, your developer and engineer friends will take you more seriously…
Trust is built!
Investing Your Money | Mistake 9 to Avoid: Thinking It’s Too Early…
…and waiting with no valid reason
If you’ve already read my post on Money Management, you probably already know what I’m talking about, but here’s a quick reminder:
A. The growth of an investment is exponential, so “as soon as possible” and “in 2 or 3 years” make a huge difference!
B. Likewise, if the value of a regular investment shows an exponential-type curve, then it’s only natural for investing to cost more and more over time.
To give you an example, it’s common to see real estate bought in French francs put up for sale and sold in euros for the same figure!
So if you’re convinced because you’ve gathered every piece of the puzzle, then go for it without waiting!
Investing Your Money | Mistake 10 to Avoid: Following the Crowd!
When you place a perfect trade, it’s usually because you saw — AND acted on — something very few people had noticed.
When you want to make a better-than-average investment, it’s the same: you have to be better. Very often, that means going up against people who haven’t yet grasped the potential of your investment.
Anticipating supply and demand isn’t given to everyone. If you’ve got it in you, make the most of it!
Investing Your Money | Mistake 11 to Avoid: Investing Without a Clear Goal
In my opinion, you have to think big while staying reasonable, and vice versa.
Hitting your intermediate goals will get you to your ultimate goal — the one that literally scares you. They’ll give you the means and the motivation boosts you need to keep moving forward. Don’t overlook your wins; every one of them matters enormously!
And build your bridges toward your ultimate goal or goals!
Investing Your Money | Mistake 12 to Avoid: Going Into Debt
No investment is 100% safe. In France, there are some where you’re almost certain to get your initial investment back, like the Livret A savings account… That said, I don’t know of a single investment that guarantees a return!
If you see that promise anywhere: Red Flag!
Knowing this, you’ll understand that if you go into debt and, on top of that, your investment loses its value, you’re left with nothing — and you’ve got a ball and chain around your ankle to boot.
In my opinion, the worst stories are those of budding investors who dive into cryptos, borrow at the ATH, go all in… and then find themselves strung up for years paying it all back.
Careful — maybe this misadventure will never happen to you in the crypto space; that said, I still urge you to be wary of this behavior no matter the sector.
Exception 1 AND the Reason: Real Estate
On the one hand, it’s dangerous to go into debt for an investment, because you’re never certain it will be profitable.
On the other hand, since real estate investing is considered the one that best combines certainty and usefulness, it becomes one of the rare — if not the only — investments worth going into debt for.
What’s more, once you’ve paid off a significant portion of your real estate loans, your borrowing capacity increases considerably. From there, you can borrow again and grow exponentially.
A Caveat: The Context of a Business
Your business has been running well for years and you’ve got cash on hand…
The urge to shift into high gear and go after new markets takes hold of you!
From there, 2 options are open to you:
- External financing
- Self-financing
In the case of external financing, if you’ve chosen a good business structure (limited liability), you personally aren’t at risk. It’s your company that takes on the debt, not you. If you’ve done things by the book, this compartment stays watertight!
Investing Your Money: 6 Mistakes to Avoid
In an investor’s life, we all make mistakes, which is why anticipating them as much as possible is essential to our success. If there were only 6 mistakes to make when investing, it would be far too easy!
Don’t hesitate to share your own investing mistakes in the comments, and we’ll try to bounce off mine!
In the meantime, if this post interests you, I once again recommend taking a close look at money management, and also the one on risk management as a trader! It will surely help you picture yourself as an investor too.
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