1. Don't know how to choose the right share to buy
2. Don't know when to bail out of a losing share
3. Don't know when to take profit on a winning share
4. Don't Know how to construct a proper portfolio
1. Don't know how to choose the right share to buy...
How does beginners choose what shares to buy amongst thousands of shares? You might choose to listen to your share broker, or listen to your "experienced" relative, or listen to free "share pick" on the internet...etc... and you will end up losing money.
Because individual share behavior is very complex, only the most professional full time traders have the right technology to make proper share pick decisions. Such experience and technology is simply not available especially to the beginner trader.
2. Don't know when to bail out of a losing share...
The deadliest killer of beginner traders is not knowing when to get out of a losing share. Too many traders hold on to their shares until it is worth nothing. Most beginners will hold on hoping that the share will stage a rebound because you simply do not have the technology to tell if a share will ever rebound! The only way for a beginner to prevent losing everything is for an expert to tell them when to get out of a trade.
3. Don't know when to take profit on a winning share...
How many times have you heard stories around you of people who hold on to shares which made them a lot of money until one day, the share turned around on them into a severe loss?
Too many people keep thinking that their winning shares will keep on winning forever and never knew when to take profit... until the shares crashed on them! The problem is again that telling when a share is losing upward momentum is extremely difficult.
4. Don't know how to construct a proper portfolio...
Do you know that many shares actually move up and down together no matter what? Do you know that there are shares that totally move opposite to each other? Do you know that many shares actually move exactly opposite to the way the market is moving? Do you know that there are shares that do not ever move? Do you know that there are shares that are on the verge of getting delisted?
If you do not know the above, how would you ever be able to intelligently put different shares together so that you can make money? What if you put a share together with a share that moves exactly opposite to it? Would you ever make money?
That is why a lot of people are turning to trading a much more reliable and much more stable instrument; Market Index or Market Index ETF.