Beginner Investor — Here is What I’ve Learned

The Scraper Guy
3 min readJan 11, 2021

--

The biggest traps you will fall into as a beginner and how to avoid them.

Photo by Karolina Grabowska from Pexels

Almost 10 months to the day I plunged into the world of the Stock Market. As a bright eyed and bushy tailed 21 year old, I believed I could become a millionaire from investing in stocks.

How wrong was I? Very.

Throughout this time I have dabbled in every trading strategy known to man.

From Options to Pennies, I have encountered every trap the industry has to offer. The following is 5 practical tips, to avoid the most common mistakes made by beginners.

Why should you trust me? You shouldn't.

Get Rich or Die Tryin’

The honest truth is you wont make millions in the stock market, unless you have millions IN the stock market.

The largest hedge funds in the world historically struggle to beat the market, how do you expect to?

The real trick with stocks or any other investment vehicle is…. Compounding

Need I say more?

Risk is Important

Understanding who you are and the risks you can take with your money is invaluable.

If you are a 40 year old married dude with 5 kids, 2 dogs, and a cat, your risk tolerance is probably going to be quite low. In this case index/mutual funds are your best friend. Stay away from individual stocks and stick to market indexes.

Which ones? That is for a different day.

If you are like me young, dumb & broke with a small portfolio, individual stocks with a lot more volatility will be the poison of choice. We can afford to make questionable decisions.

Obviously starting with an amount you are willing to lose is classic advice but still remains true today. Stocks down should not equal financial hole yo.

Penny Stocks are the Devil

My first ever stock I purchased, was an interesting company by the name of Ideanomics. Eventually comprising of 40% of my portfolio IDEX surged on the back of discords stock groups and pumpers. I eventually cashed out at 95% profit.

Warren Buffett could only dream of returns like that.

The truth is I proceeded to give all that profit back through other penny ventures which are always sold as the next big solar company, or the EV Manufacturer to end all Manufacturers.

The so called Penny Gurus on Twitter drive this fantasy by posting incredible gains. The problem is they have cultivated massive followings to the point where they post a “tip” and it instantly jacks the price up. Sell and repeat.

Its Jordan Belfort levels of genius.

Deals with the Devil always turn out one way.

Options

The options market or as I like to call it, degenerates paradise.

WallStreetBets an infamous subreddit has brought options to the mainstream. Watch the following video and you should have every bit of evidence as to why trading options is a bad idea.

Watch everyone else blow up their accounts, instead of you.

Magic Indicators Don’t Exist

So Math Nerds can finally make me money?

After discovering the world of technical analysis I was hooked. An almost endless supply of indicators, I was guaranteed to beat the market.

After trying every combination of indicators known to man, I came to the conclusion that indicators are useful but wont retire you at 25.

For any investment we should try to create a well rounded picture of where the company is financially now and into the future (Fundamental Analysis) and how the chart looks through indicators (Technical Analysis).

It cant hurt to learn about RSI, MACD, Bollinger Bands, MA’s and EMA’s to name a few.

But beware its a rabbit hole, don’t fall down.

Stop reading articles on Medium and get investing!

The longer you are in the market the more your 40 year old self will appreciate it!

Happy Investing.

--

--

The Scraper Guy
The Scraper Guy

Written by The Scraper Guy

Teaching You How to Scrape Using Python LinkTree - https://linktr.ee/scrapingguy

No responses yet