2. Trading frequently.

Traders who are new to trading, buy, and sell too often. Here, it is the broker who makes the money. Let us say you invested Rs.50,000 and do 50 trades in a year at a brokerage 0.3%, you would have paid Rs.15,000 as brokerage. In other words, you will have to get a return of more than 30% to break even. Actually, if you take the taxes involved and consider inflation, you will be losing money. Investors trading too frequently will also be incurring short-term capital gains tax instead of benefitting from free long-term capital gains tax.

3. Investing in a particular sector or stock.

Many investors make the mistake of putting all their money in a particular stock or sector. This must never be done. One must diversify his or her investments. At any given time, the investment basket must contain stocks of different companies covering various sectors.

4. Investing the entire capital in one go.

Stock markets keep fluctuating up and down all year round. Imagine for a moment that you had bought the stock when it was at its peak. You are sure to regret right? So planning ahead is a must to help you spread your planned investment in three or four installments. When you see an opportunity, only invest 40% of the funds you have allocated. The remaining 60% must be invested preferably in three equal installments so that you can make use of the dips in prices which help you bring down the average cost. But if you were to invest the entire money in one go, you will not have the cash to take advantage of the dips in stock price. Investing in one go also makes the investor prone to make decisions due to fear and end up in panic selling of the stock.

5. Investing in the stock of the company where you work.

Sometimes a company encourages its employees to invest in the company. Employees may sometimes be tempted to invest their entire savings and there is the danger that if the company were to go bankrupt, they not only lose their job but also their investment.

6. Fear

Fear is an emotion that is surely detrimental to investors. Although one should be cautious and be prudent while making investments, there is no use panicking every time the market goes down as it is not a solution. Investors, who are prone to panic reaction, usually buy high and sell low.

7. Investing in a large number of stocks.

Investing in a large number of stocks is a sure way to get confused. One would find it extremely difficult to keep track of too many stocks at a time. If diversification is what you are looking for, then it advisable to invest through mutual funds. If one were to invest in 50-100 different stocks, it becomes very difficult to monitor all the stocks effectively. While diversification is indeed desirable, it should not be overdone. A portfolio comprising of 10 to 12 stocks from different sectors can be considered good.

8. Too much of enthusiasm.

A new investor is likely to be over-enthusiastic at the beginning and their level of enthusiasm can be seen to drop over a while. Newcomers to the stock market get automatically attracted to intra-day trading even before fully understanding the nitty-gritty of the stock market. Their enthusiasm may act against them. To make profits in Intra-day trading, one needs a lot of discipline and experience to start making profits. When it comes to intra-day trading, even the experienced traders move cautiously.

9. Using funds one cannot afford to risk.

Never invest money you can’t afford to lose. As there is no sure way for making money in the stock market, one must be careful to invest only that money one can afford to lose. One should not deploy funds that have been set aside for a specific purpose like for example their daughter’s wedding or education.

10. Not having a definite plan.

Not having a plan is like cooking without a recipe. One must have a definite plan of action for investment and have a clear idea as to how they will invest. This is necessary because it is practically impossible for anyone to research all the shares being traded in the market. So, it is important not to deviate from one's plans even if others are making investments that are opposite to his or her views. One must of course be flexible to re-evaluate the plans and change them, in case the original one doesn’t give profits.

11. Postponing the investment plan.

Postponing the investment until one has the ‘extra’ money is a great mistake. As the value of the money that is invested compounds over time, one could miss out on potentially good opportunities to generate wealth. Although there may once again be opportunities to invest in stocks, they may not be the same and could be better or worse than the previous one. It is therefore important to start investing at the earliest.

12. Going after the performance.

Some investors choose shares based on their recent performance. The thought that they have missed out on an opportunity has often been the cause of bad investment decisions. For instance, when a particular stock may have performed extremely well during the previous three or four years, it is clear that one must have invested in the stock three or four years ago. It is possible that now, the cycle that led to the wonderful performance could be ending.

13.Taking advice from friends to make investments.

One should remember that what is good for a person may be bad for another. For instance, the timing of the investment may not be right. Your friend could have told you about a particular stock in which he or she may have invested, and might have already made substantial gains. But by the time you decide to invest, the prices may have already gone up.

14. Depending on luck

Making money from investing in stock markets is not a matter of luck. Investing in stocks involves developing one’s own strategy, analyzing the stock in-depth, learning about the company, and finally patience.