With today’s technology and online connectivity, it is now even more convenient for more people to invest. With the existence of many online discount brokerages, people can become instant investors and trading stocks just with an Internet connection and a bank account. This might be considered a benefit for many first time investors. But it also brings with it a number of caveats.

The ease and accessibility of trading and investing options for novice traders can also put them at a greater risk of losing their money. Due to inexperience, it can be very easy for them to commit very costly mistakes. Here are just some of them:

Lack Of Preparation

Just because novice traders and investors now have an easy access to the market doesn’t necessarily mean that they are already ready for it. Some first-time investors and traders can become too excited that they try to jump in head first only to get burned later on. Stock trading and investing can be quite complicated than what one may think. Trying to learn the very basics at the very least can help people understand better what they are getting into and what is in store for them. Preparing before making any moves is important for any novice investor or trader.

Not Being Aware Of Risks

Most novice traders and investors also make the mistake of trying to risk more than what they can afford to sometimes. When they see what they presume as a golden opportunity in the market presents itself, they sometime do not have any second thoughts of going all in and dream about the profits that they stand to gain from it. But this mistake can be a very costly one. Experienced investors and traders are always aware of the risk involved, no matter how attractive an opportunity may be. This awareness comes with experience and is something that traders and investors learn over time.

Dealing In Penny Stocks

Penny stocks can look like quite an attractive area for many novice investors to try out. Just by the fact that investors can acquire quite a good number of shares for little capital can give them that perception that they can own a lot as well as profit from them. But in reality, dealing in penny stocks can be very risky since such stocks are quite vulnerable to manipulation and can be quite difficult to liquidate. While they can be easy to buy, they are not that easy to sell. While penny stocks are known to have prices that can shoot up suddenly. But it is also known to crash just as fast. This type of volatility makes penny stocks a very risky option to invest in, despite the price and position size advantages they offer.