For many investors, the biggest risk they face is their own behavior. Unfortunately, a substantial number of people with money in the market are currently engaging in just the type of action that could cause them to experience substantial losses: Checking the market every single day.

In fact, recent research from Personal Capital revealed that 32% of investors are looking at their stocks on at least a daily basis. And as many as 40% of people have indicated they're checking the market more frequently than before.

While this may seem harmless, or even prudent, the reality is that this behavior can set you up to make very bad decisions.

Man looking at stock charts on the computer.

Image source: Getty Images.

Why checking the market every day could be your biggest investment mistake

As nice as it might be, very few stocks or exchange-traded funds (ETFs) go up every single day on a nice steady path toward positive returns. Instead, stocks (and the market as a whole) have good days and bad days, or even good weeks, months, or years and bad ones. When you're checking your portfolio balance every day, it's easy to lose sight of this and end up making poor decisions based on emotion rather than on a sound investment strategy.

Obviously, this is a big problem during market corrections, when you may be tempted to panic sell your stocks when they're going down -- thus locking in losses that might have been erased if you'd left time for the market to recover. But it can also be an issue even when things are going well. If you start to see an investment going up in value, purchasing more of it may not always be the smartest move, especially if doing so would leave you over-invested in that company or industry and leave your portfolio unbalanced. But if you're obsessively looking at your portfolio, fear of missing out might cause you to react and buy at the wrong time. 

On the other hand, when you start to see gains on an investment, it's also tempting to sell and lock them in -- potentially leading you to unload your shares too early and miss out on tons of potential profits you could've realized had you been more patient

Of course, any investor could end up buying and selling at the wrong time, since you can't predict the future. But those who check their stocks every day are more likely to become convinced to act based on short-term data, since they're constantly assessing stock performance and may easily confuse day-to-day fluctuations in price with likely long-term outcomes. 

There's another big downside too -- even if you don't react based on how your portfolio is performing on a daily basis, you're much more likely to experience a lot of financial stress if you're checking in every day. And since stress can cloud your judgment, that can make sound decision-making even more difficult. 

How often should you check the market?

If you can be disciplined enough not to react to swings in the market and you enjoy looking at changes in your portfolio balance often, checking the market every day may not be the worst thing in the world -- as long as you don't let what you see panic you when things are going poorly, or prompt you to become too confident in your investing prowess based on short-term performance.

But even if you believe you'll react with a level head, chances are good that you won't. To avoid giving in to the temptation to act based on emotion, aim to check in less often. Around once a month or so is reasonable, or if you have a specific need to check in because you're rebalancing your portfolio as your investing timeline changes.

Not focusing too much on the day-to-day performance of your stocks can make you a much happier investor -- and can help you to make sure your behavior isn't the factor that costs you the potential for positive returns.