Five Powers Required in Investing in Stock Markets
In Investing the main difference between those who are having successful trades and those who are always on the list of bad trades is that the rules and the basic Powers required in Investing. In this article, we will discuss the Top Five powers required in Investing in Stock markets for having a successful trading journey.
The list is as below
- Avoiding FOMO – Fear of Missing Out
- Understanding the game you are entering into
- Patience vs Stubbornness
- Comfortable being miserable
- Reasoning your Decision
Avoiding FOMO in Stock Markets
The first and probably the most important skill in the stock markets or for that sake in any investing field is that you should not let your fears make the decisions for you.
You see a stock price suddenly moving up and you don’t want to miss the upward move. But you are afraid that the stock may fall from this price. YOu wait for some more time and still, it’s moving up and you with the fear of mission out the current upward trend buy the shares and enter the trade. But you soon realize that the stock price since then started to fall.
In this scenario, you are entering the trade just with the fear to not miss the trade. YOu actually of no reason why the price is moving up and you have no idea if the trend will continue. you just enter the trade to book losses.
You have to avoid your fears to the maximum extent possible to influence your decision making and this is one of the important psychological aspects that is required in stock market investing.
Understanding the game you are entering into
Understanding the game you are entering into or the trade you are about to take. Before taking any trade just ask yourself what is the reason for taking the present trend. Do you have any reason or you are just entering the trade randomly.
Even when you are entering a trade because of a piece of recent news, or because of recent results that are released by the company, just understand the game you are entering. There are millions of investors and we are all following the same company, we all read the same news, we all will have the same kind of information. Right from the most experienced to the newcomers to the stock market aim at making profits. If there is one person who is making profits, it means there is another person loses it is. And the game you are into is profits for one and loss for one and you are against the most experienced Investors and the well-trained algorithms.
Understanding your game, without being swayed by people playing different games, is a rare investing power.
Patience vs Stubbornness
It is always suggested by everyone to aim for long-term investing. You have to stay invested for a long time to get the most benefits from the trade. In such long time trading, patience is one important thing. You might have heard the most popular suggestion when investing in stock markets.
Stay invested for long time and don’t bother about the short term corrections in the price. You should have patience in the stock market.
But it is very important to understand the difference between patience and stubbornness. In the world, not all things move up in a long time. Many things fall for some time and then they keep falling and then permanently they fall. there are many shares of a company that fell major percentage points and they never recovered from that fall. Your patience in such times will cost you very badly. You have to recognize between the short term correction and the start of a long time permanent fall in the stock prices. This can be studied by constantly understand the company performance.
Comfortable being miserable
Even the most successful trader will have a lot of trades that go against them. No every trade decision that has taken results in profits or moves in our favourable direction. You can even lose a lot of money in a lot of trades and losing will make you miserable. But you should understand the game. You are not supposed to make each and everything correct and you have to be comfortable to accept these losses and continue the game with more improvement.
When you get yourself caught in this miserable position and let your emotions take control over you, then that is the point you will start making the wrong decisions. You have to develop the skill to accept the miserable position and continue with the basic principles and avoiding the mistakes that are done earlier.
Reasoning your Decision
Taking decisions just out of random intuition can be sometimes regarding. Buying a stock just because it is on the up move over the past few days can be rewarding. But not always works in your direction. You have to be very sure of why you are entering a particular trade and what can support the trade-in your favourable direction.
