Stock investment decision making
Investing in stocks is a savings game. To conduct all games, you must know and follow the prescribed rules and regulations. Any infraction means that you are penalized. The sanction is proportional to the seriousness of the rule violations.
Just as navigation is easy through the calm waters of the sea, in addition to the extensive knowledge you have about investing in stocks, the main condition is that you must deal with the problems related to buying and selling with a calm mind. Let it be fully understood that your emotions have no role to play when faced with exchange volatility. Even in the normal market, they have no role. When you’re not in the right frame of mind, you make the business decision at the worst possible times.
Fear and greed combined with emotions is a bad scenario that an investor can create for himself.
Some of the points to consider before trading stocks are:
1. For starters, don’t get carried away by killer instinct. Look for modest returns.
2. Adopt the traditional tactic of long-term returns. Invest the same amount of money at regular intervals and buy in small batches. Naturally, you will buy more stocks when prices are low and less when they are high.
3. Take advantage of the services of a broker. Before hiring him, meet him face-to-face in his office. Have a preliminary discussion about your financial goals. Get a copy of the company’s commission schedule. Determine what kind of services you need from the broker. You may need recommendations, research reports, and investment advice.
4. Once you focus on hiring a particular broker, provide the correct information about your goals, personal finances, net worth, and your previous investing experience. This will allow the broker to make the right decisions for you.
5. Now you get to the crucial point. Who will control decision making for your operations? You must specifically state in writing that the broker is the decision-making authority, if that arrangement suits you. Once that authority is vested in the broker, he will make decisions without consulting you. Those decisions will be the best for you under the prevailing conditions. If you suffer a loss or profit on a particular trade, it is not the broker’s business. Therefore, discretion should be given after very careful consideration when you are fully convinced of the broker’s ability and track record of success.
6. Never invest in a stock you are not aware of and avoid guesswork. Learn the basic financial terminology and fundamentals of investing.
7. Invest to make a profit, not to lose money. At the same time, you should know that investments in stocks are always associated with some degree of risk.
8. The past performance of a company is not a guarantee of future success. Don’t make investment decisions hasty because of the strength or intensity of the seller’s appeal. He is doing his business, please do yours!
9. Beware of catchy phrases that are often used in stock trading, such as “inside information”, “confidential leak”, “an acquisition in sight”, “a dynamic product”, and so on. Your money will never be able to double in six months as many have promised!
10. Do your best to limit transactions. The more transactions, the more commission you will pay.
11. Don’t focus on just one product. Let your portfolio take care of different industry segments.
12. Broadly speaking, there are four types of investment strategies: Fundamental Approach, Psychological Approach, Academic Approach, and Eclectic Approach. Each approach requires detailed study. Keep your knowledge of these strategies current and you may need to change your strategies based on market volatility and conditions.
You will gradually evolve as a good investor through your experience and theoretical knowledge. Both are important. Never lose focus and drift off the slopes, while investing. Years of hard work and profit can be undone by wrong operation.
