One of the mistakes that I believe is most prevalent among individual investors is the lack of differentiation between a trade and an investment. An investment should be designed to bring an investor capital appreciation over time, while a trade should be a shorter term bet that a stock will move because of a specific catalyst or technical signal. 
So you ask, why should you be concerned to not confuse the two? Quite simply, you can lose a lot of money by confusing the two. A trade that is designed to be just a trade around a specific catalyst can lose you a lot of money if you are stubborn and do not cut ties with the stock. For example, if you have bought a small-cap oil stock because of an impending hurricane that ends up fizzling out, you'd better get rid of that stock. I have seen far too many cases where an investor holds on, hoping for good fundamentals even though the catalyst is gone, and they are hurt badly.
A good amount of investor probably understand that cutting ties with a trade when the catalyst is gone is a good idea, but the flip-side of why shouldn't confuse a trade with an investment is less understood. Someone who buys stock in a company with great long-term growth prospects and a solid balance sheet should not be concerned about short-term price movements. Too much concern with short-term price movements can very easily make an investor bail too quickly on a solid company. Today's stock market is very volatile and prone to fast swings, which requires the individual's patience with an investment.
Some people like to trade, some people like to invest, but everyone must be sure not to confuse the two. Lengthening a trade into an investment or cutting an investment down to a trade are both losing propositions.
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