Investors are buying something they believe has strong leadership, a great business plan and a competitive edge that will continue to increase corporate earnings for years to come. These companies, in turn, will provide shareholders with a profit by returning dividends and an increase in company value, both which will contribute to increasing an investor’s net worth. But it’s easy even for an investor to get caught up in the hype of a hot stock or quick profit now and again and start to act like a stock trader. Investors have to remind themselves what their ultimate goals are and refer back to their investing rules.

As an investor, the most important thing is to protect oneself from losses. When they start to act like a trader to make a quick buck, investors put themselves at too high a risk of losing money. Just think, if you lose 50% in a trade, it will require a 100% profit in another just to break even. These percentages should be too much risk for an investor, who is generally careful to protect his/her downside. One temptation to ignore their investing rules and act like a trader can greatly impact their overall investment returns.