- Selling low: don’t let the emotion in the way. When the markets tank, remember that the psychological impulse is to react. Be rational and stay the course with your sound investment plan.
- Buying high: buying only when things are going well is also a mistake. The psychological reaction this time is euphoria and impulse to make bold investments. Make sure to invest regularly, to take advantage to the dips and soften the peaks.
- Taking too much risk: Invariably, investors feel confident when the markets are up and feel comfortable with high risk investments. High risk does not always equate high returns. It actually means that you have to be more tolerant to big swings. Match your investments to your true risk tolerance and that will be just fine in any markets.
- Trading too much: Switching investment strategy too often
- Trying to look rich: this is my favorite! Don’t try to look as rich as you wealthy friends. Live within your means and look smart.
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