Being an investor is a profession that requires continuing education. Every investor should learn to keep on learning, so to say. In this case, every person who’s interested in investing should keep these five things in mind not just during his amateur days, but in his whole life as an investor.
Emotions are an integral part of our human psyche. Lives go mostly by how our emotions dictate us. However, emotions have no place in investments. Imagine how many losses you would incur if you suddenly withdrew your investment in a stock (when you’re doing day trading) because you felt fear that it would drop in price very soon even though there are no indicators for such.
Inversely, imagine how many profits you would’ve missed if you allowed yourself to linger too long in holding shares of stock that you think would keep on rising in price when in fact, the bubble is about to burst.
Let’s face it – investing is a gamble. You’re wagering your money in potential increases in price, but you are also exposed to the risk of that price dropping significantly. Thus, if you’re going to start investing, make sure that it is money you’re prepared to lose.
This is similar to playing at the casino. To keep the games fun, you must not wager money that you cannot bear to lose. This is how people fall into debt – they attempt to chase their losses even though it’s clear that they cannot win their money back. In the end, they lose ALL their money that way.
There’s always a time that you might think that: “I shouldn’t be trading today. It’s a slow day.” Well, if you’re thinking that it’s very slow on a particular day, well, you shouldn’t trade. If it is a slow day, it will definitely be a slow day. You probably will gain some miniscule profit but you’re investing to make it big, not small.
If it feels slow, give it a rest. Go out with friends. Have a drink. Go island hopping. Do anything else.
Investing is more than just putting your money in a stock, or any financial instrument. That’s actually just the end game. Much of an investor’s life is spent in researching. Before you invest in stocks, for instance, you have to research about the issuer and see if there’s any reason why you should invest in the company.
There’s always a first time. You’d probably incur some losses early on in your career as an investor, but that’s part of the learning curve. Don’t let your failures discourage you from the otherwise lucrative life of being an investor.
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