What are the biggest mistakes that investors make, and how can they be avoided? originally appeared on Quora, the place to gain and share knowledge, empowering people to learn from others and better understand the world. You can follow Quora on Twitter, Facebook, and Google Plus.

The biggest mistakes are: acting on emotion or reacting impulsively. The first step is to acknowledge the emotion that drives the behavior. Depending on how actively you are engaged in the various asset classes in your portfolio, the best advice can be to seek out a trusted financial advisor. The other potential mistake is trading too often. This isn’t meant to imply buy & hold on a passive basis but sometimes the trigger to transact can drive a lot of friction (cost) into the portfolio which is a headwind to the total return and therefore is an important consideration.

There have been multiple studies to see the cost of emotion in the stock market. I have personally seen the cost of this during the 2008 crisis when client portfolios had peak redemptions when the markets were their lowest (1Q2009) which assured these investors of missing the rebound that has arguably run for 10 years straight.

For example, as an investor who acts on the “feeling “ of calling the market, there are multiple issues that are felt in your portfolio. The idea of buying into a rally means that some portion of the upside has happened. As the market participants speak of the strength of the market, there is a tendency to engage and invest further. In historical cases, this has turned out to be when markets turn and the retail (least sophisticated money) is left holding the “bag”. At some point during the downturn, these same investors are unable to stomach the full cycle and tend to divest at the wrong end of the cycle. So, “timing the market” is generally a mistake for the retail investor and instead they should focus on creating pools of investments that have different time-based needs. For example, longer term funds can stay invested through cycles and short-term needs should have cash or cash-like instruments available.

The other mistake I mentioned involved high transaction costs. In equities, many of the online brokers have $0 commissions, but there is still a bid/ask spread “cost” that is a more hidden cost. However on the fixed income or bond side of the portfolio there are both the transaction costs and also the less visible bid/ask costs that continue to be present and important to understand. Because the bond market trades more on a “by appointment” basis (think about artwork as an analogy) vs the equity market that largely trades on an electronic exchange. For example, we all have a common view on the equity price of GE by looking at our phones. So, when trading in a less liquid market like we are discussing for fixed income, the spread between the bid price and the ask price can be meaningful and therefore more turnover causes more friction. At 280 CapMarkets, our mission is to provide our cloud platform, BondNav, to investment advisors so they have more data within the opaque bond market and a more comprehensive view of the best prices to help narrow the spread. Today, the ticket charge or fees to consummate a trade continue to exist, so again, it's important to be aware of those costs.

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