Patterns for picking a loosing trade

Making a stock purchase is an investment but I have seen that sometimes a very savvy investor also makes mistakes which at times can lead to huge losses.

I have observed some very common patterns of loosing money or in other ways investing in a loosing trade.

A News Based stock moves higher, however the market realizes the fundamental problems with the stock and finally the stock corrects lower, investors think that the stock is momentum driven however in most cases you will end up with losses as your entry point for the stock is too high (E.g. GBSN, it's product got FDA approved, stock was up more than 70% up intra day, however with days it corrected more than 70% and gave up all it's gains as the company announced another round of reverse split back in 2016)

B News Based stock corrects lower, however company fundamentals are strong. Someone who shorts the stock is caught napping as the market realizes it's mistake and traders cover their positions and the stock regains it's original price (E.g. LLY as you can see below had a very good entry point last year as one of it's cancer studies failed and it touched $ 63/Share intra day, however it's a great company and has a very good pipeline and recovered the shock in no time. If you were shorting the stock based on the news you would have again invested in a loosing trade

C Investing based on recommendations in Stock twits or yahoo forums
Most new users get carried away and just take recommendations so seriously that they just make investments based on what someone is saying about a stock. They do no due diligence and just are so sure to make 100% gains in a single day based on the hype of a trade. (E.g. SKLN which makes medical equipments gave opportunites where the stock gained more than 100%, however traders got so excited that they gave 10-12 Dollar price targets, looking at the momentum investors make their purchase only to realize their mistakes as the trade unfolds and the fundamentals come in play

D Analyst Recommendations:- Analysts sometimes make such a compelling bull case that investor ignore everything and just make the investments thinking it's the God's voice and nothing can go wrong. I respect analysts but you have to realize that it's your hard earned money and analysts are also human beings so they can also make mistakes.

E Short Squeeze Candidates
Always check for outstanding shares and short % of a stock. An insignificant news can also lead to huge price swings where you can loose tons of money very quickly. (E.g. DRYS, which just spiked last year to around 100 Dollars per share and is currently trading at 0.85 Cents.

The golden rule to investing is to apply your due diligence, come up with a clear entry price for a stock, figure out what would be a good exit point and your investment horizon. In a nutshell, follow the basics and let not emotions get the better of you when making investment decisions.