New Investors Losing Money Fast Due to Overconfidence and Poor Discipline

Many novice investors, known as 'F0,' are losing money rapidly due to a combination of overconfidence and a lack of discipline, according to Nguyen Tien Phong, Director of ACB Securities' Ho Chi Minh City branch.

“

One of the most common mistakes of new investors (F0) is mistaking luck for skill.

Phong explains that during strong market rallies, when many stocks rise together, new investors can mistakenly believe they've mastered the market. This premature confidence often leads them to increase their investment size or use margin trading just as the market is about to correct. While margin can amplify gains, it equally magnifies losses, sometimes forcing panicked selling at low points, only to see the market rebound shortly after.

Another prevalent error is the fear of missing out (FOMO), driving investors to chase soaring stocks or follow rumors and group recommendations. Entering a rally late makes them susceptible to being the last buyers before significant capital withdraws. Furthermore, the reluctance to set stop-loss limits allows small losses to balloon into substantial ones, as investors hold onto losing stocks hoping for a rebound, often until their accounts are severely depleted.

“

Margin can help amplify profits but also increases losses many times over.

Phong also cautions against excessive trading. Frequent buying and selling not only incur higher transaction costs but also encourage emotional decision-making, typically leading to lower long-term returns. For an F0 with an initial 100 million dong, Phong stresses that risk management, not profit maximization, should be the top priority. This initial capital serves as both investment and a psychological buffer; a 50% loss requires a 100% gain to break even, and such significant losses can impair future judgment.

“

The 100 million dong is not just investment capital, but also tuition and psychological capital for new investors.

Nguyen An Huy, Asset Management Director at FIDT, echoes this sentiment, advising new investors to first learn to slow down their decision-making processes. He notes that the brain tends to react quickly to new information, often overlooking cautious deliberation. Creating a pause before any buy or sell decision is crucial. Huy emphasizes that market opportunities will always arise, but they are reserved for those who retain capital. Without a proven trading system, focusing solely on profit can turn investing into mere gambling.

“

Investors should create a 'pause' period before each decision to buy or sell assets.