Perhaps the most important characteristic of successful traders and investors have in common is their psychological approach to the market. All forms of investment are basic skills needed to succeed in this market. I do not pretend to think that only the right lane, and trade in equities, commodities or market successfully. But you may be the world expert on the commodity market and not be able to put this knowledge into financial success.
Two emotions, fear and greed, may be hazardous to your financial success. Develop a systematic approach and impassive trade and investment is essential to success. The following ideas will help you control your emotions and improve their operations.
Develop a trading system
Many people on the market in a very fragmented. One day, they buy blue chip stocks that pay dividends, and the next day they play advice of his nephew in biotech start-ups. Develop a system that fits your personal style, risk tolerance, level of knowledge and the time available to devote to this activity. Decide to run what the market and exactly how it will work. Suffice it to say that you are not buying and selling shares of a trading system. Write your own rules. For example, a stock investor, what criteria must be met actions? At what price will you buy? They are short stock? Where your Stop Loss price? How much will you invest in each position? How to diversify industries? Rotate in and out of sectors as they fall out of favor with the markets? Whenever possible, try to do so, to ensure that their rules and that your system has a reasonable expectation of profit.
Do you have a written plan for each operation
Before buying these shares or options or distribution equipment other hand, you must make important decisions. Write your answers to the following questions: Why do I think this is a good idea? At what price I have to admit that my idea will not work and close the deal? Appropriate to the company, the price at which I will make some adjustments to the job? At what price can I receive my winnings? The answers to these questions are your trading plan. Make sure you have a plan before the foundation of the negotiation.
Follow a plan
This is perhaps the most difficult aspect of trading, should dominate. Once you have your plan, you have the discipline to follow the plan without emotions. Rationalize not change the way the stock or is it your ego refuses to admit his mistakes. If the share price falls below the Stop Loss, you close the position.
I hope not. Not rationalize. Follow your plan.
Evaluate your results
Establish a routine for the regular review of its trade. When I. See my trades every month a significant difference between my “losers” and my “bad” result Crafts Crafts bad if I break my own rules in order. Exchange or the lack of discipline to follow the plan to give Losing trades where I followed all my rules, but fair trade is not working as expected. These losses are simply a “cost of doing business.” It is important to your investment as a business, not a hobby to treat. In any business, there are costs involved in opening the business. commercial losses are an expected and necessary part of any investment activity. Trading into each company and plans to ensure profitable operations will exceed your losses.
This is not a game
A common misconception says that the investment is similar to gambling. In fact, if you look closely at the actual operation of many investors who are actually players. Here are some tips and hunches, to invest heavily in a timely manner, mergers, investments in anticipation of the start-ups, etc.. But keep in mind the activities of gambling – not the players, but the casino. The casino is a game in the casino has a statistical advantage, depending on the game, the edge may be very low, of the order of 1-2%. The casino owner knows that he knows to be a big winner today one of the blackjack tables, but it is not worried because he has an advantage. When the average of all the other players and the game, and succeed in the long run, the casino is.
If you work hard to develop market knowledge is negotiated, the development of a commercial system, a written plan for each operation, follow your plan with discipline and learn from your mistakes, you must be the owner of the Casino is positioned one of the clients.
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