Beginner · Stay safe
Beginner Mistakes and Scams to Avoid
The ten most common beginner mistakes, scams to recognise, and golden rules to protect your money.
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1. Ten common beginner mistakes
- Buying on "tips" from Facebook, TikTok, Telegram or WhatsApp groups without checking the company.
- Putting all your money in one share or one sector.
- Using money you need soon: school fees, rent, a loan repayment. Invest only money you can leave for years.
- Borrowing to buy shares (margin loans) before you understand the risk.
- Chasing a share that already went up 15% several days in a row (upper circuit), hoping it never stops.
- Panic selling when the whole market falls for a few days.
- No exit plan: no stop-loss or target, so a small loss becomes a big one.
- Ignoring costs and tax: frequent small trades can eat your profit (see the calculator).
- Forgetting EDIS after selling, which delays settlement.
- Not learning the basics: EPS, P/E, book value and dividends take an hour to learn (see the Fundamental guide).
2. Scams and traps to recognise
| What you see | What it usually is |
|---|---|
| "Guaranteed 20% profit per month", "sure-shot share" | Nobody can guarantee share returns. This is a trap. |
| A paid "VIP group" with daily buy calls | Often pump and dump: the organisers bought first and sell to you when you buy. |
| A small, unknown company suddenly rising every day with big volume and hype posts | Possible price manipulation. Check its profits and news before touching it. |
| Someone offers to "manage your MeroShare/TMS" or asks for your password, PIN or OTP | Never share them. They can sell your shares or block your money. |
| A link that looks like MeroShare or your bank, sent by message | Phishing. Type the official address yourself. |
3. Golden rules
Protect your capital first. A 50% loss needs a 100% gain just to get back to where you started.
- Invest regularly (for example every month), not all at once.
- Spread money across a few good companies and sectors, or use mutual funds.
- Prefer companies with steady profits, a good dividend record and reasonable P/E.
- Keep an emergency fund outside the share market.
- Keep a simple diary of why you bought each share and when you would sell.
If you lose money to fraud, report it to your broker, SEBON and the police (Cyber Bureau) quickly.
Rules and rates checked October 2026. They change from time to time; confirm with your broker, your DP or SEBON before acting.