In the last few days I have been reading and meditating a lot while spending time by the sea. At times, I also went through the news feed, which I rarely do. I noticed again and again how emotional many market participants are and how little it is sometimes about facts. In doing so, I also questioned myself critically and came to the conclusion that this is a completely normal maturing process any successful investor (or trader) has to undergo:
If the market’s behavior seems mysterious to you, it’s because your own (and peoples) behavior is mysterious and unmanageable. You can’t really determine what the market is likely to do next when you don’t even know what you’ll do next. Because more than other things, the market cannot be planned. There is no blueprint. More like chaos theory. 😃
𝐔𝐥𝐭𝐢𝐦𝐚𝐭𝐞𝐥𝐲, 𝐭𝐡𝐞 𝐨𝐧𝐞 𝐭𝐡𝐢𝐧𝐠 𝐲𝐨𝐮 𝐜𝐚𝐧 𝐜𝐨𝐧𝐭𝐫𝐨𝐥 𝐢𝐬 𝐲𝐨𝐮𝐫𝐬𝐞𝐥𝐟. 𝐀𝐬 𝐚𝐧 𝐢𝐧𝐯𝐞𝐬𝐭𝐨𝐫, 𝐲𝐨𝐮 𝐡𝐚𝐯𝐞 𝐭𝐡𝐞 𝐩𝐨𝐰𝐞𝐫 𝐠𝐢𝐯𝐞 𝐦𝐨𝐧𝐞𝐲 𝐭𝐨 𝐲𝐨𝐮𝐫𝐬𝐞𝐥𝐟 𝐨𝐫 𝐭𝐨 𝐠𝐢𝐯𝐞 𝐲𝐨𝐮𝐫 𝐦𝐨𝐧𝐞𝐲 𝐭𝐨 𝐨𝐭𝐡𝐞𝐫 𝐦𝐚𝐫𝐤𝐞𝐭 𝐩𝐚𝐫𝐭𝐢𝐜𝐢𝐩𝐚𝐧𝐭𝐬. 𝐓𝐡𝐞 𝐢𝐧𝐯𝐞𝐬𝐭𝐨𝐫 𝐰𝐡𝐨 𝐜𝐚𝐧 𝐦𝐚𝐤𝐞 𝐦𝐨𝐧𝐞𝐲 𝐜𝐨𝐧𝐬𝐢𝐬𝐭𝐞𝐧𝐭𝐥𝐲 𝐭𝐚𝐤𝐞𝐬 𝐚𝐧 𝐚𝐩𝐩𝐫𝐨𝐚𝐜𝐡 𝐨𝐟 𝐢𝐧𝐯𝐞𝐬𝐭𝐢𝐧𝐠 𝐟𝐫𝐨𝐦 𝐭𝐡𝐞 𝐩𝐞𝐫𝐬𝐩𝐞𝐜𝐭𝐢𝐯𝐞 𝐨𝐟 𝐦𝐞𝐧𝐭𝐚𝐥 𝐝𝐢𝐬𝐜𝐢𝐩𝐥𝐢𝐧𝐞. 𝐀𝐥𝐥 𝐨𝐟 𝐮𝐬 𝐡𝐚𝐯𝐞 𝐨𝐰𝐧 𝐝𝐞𝐦𝐨𝐧𝐬 𝐭𝐨 𝐞𝐱𝐨𝐫𝐜𝐢𝐬𝐞 𝐨𝐧 𝐭𝐡𝐞 𝐣𝐨𝐮𝐫𝐧𝐞𝐲 𝐭𝐨 𝐛𝐞𝐜𝐨𝐦𝐢𝐧𝐠 𝐬𝐮𝐜𝐜𝐞𝐬𝐬𝐟𝐮𝐥 𝐢𝐧𝐯𝐞𝐬𝐭𝐨𝐫𝐬.
Here are several rules that worked for me as I grew from an amateur into an erratic semiprofessional and finally into a calm professional. You may change this list to suit your personality.
1. Decide that you are in the market for the long haul—that is, you want to be an investor even 20 years from now. Understand that it is not a sprint, but a marathon.
2. Learn as much as you can. Read and listen to experts, but keep a degree of healthy skepticism about everything. Ask questions, and do not accept experts at their word.
3. Do not get greedy and rush to trade—take your time to learn and be patient. There will always be good opportunities in the months and years ahead - you don't miss anything.
4. Develop a method for analyzing the market—that is, “If A happens, then B is likely to happen.” Markets have many dimensions—use several analytic methods to confirm investments. Test everything on historical data and then in the markets, using real money. Markets keep changing—you need different tools for investing in bull and bear markets and transitional periods as well as a method for telling the difference.
5. Develop a money management plan. Your first goal must be long-term survival; your second goal, a steady growth of capital; and your third goal, making high profits. Most investors put the third goal first and are unaware that goals 1 and 2 exist.
6. Be aware that the person itself is the weakest link in any trading system. Learn how to avoid losses or develop your own method for cutting out impulsive investments.
7. Winners think, feel, and act differently than losers. You must look within yourself, strip away your illusions, and change your old ways of being, thinking, and acting. Change is hard and takes time, but if you want to be a professional investor, you have to work on changing and developing your personality consistently.
𝐈𝐧 𝐨𝐫𝐝𝐞𝐫 𝐭𝐨 𝐬𝐮𝐜𝐜𝐞𝐞𝐝, 𝐲𝐨𝐮 𝐧𝐞𝐞𝐝 𝐝𝐫𝐢𝐯𝐞, 𝐤𝐧𝐨𝐰𝐥𝐞𝐝𝐠𝐞 𝐚𝐧𝐝 𝐝𝐢𝐬𝐜𝐢𝐩𝐥𝐢𝐧𝐞. 𝐌𝐨𝐧𝐞𝐲 𝐢𝐬 𝐢𝐦𝐩𝐨𝐫𝐭𝐚𝐧𝐭, 𝐛𝐮𝐭 𝐥𝐞𝐬𝐬 𝐬𝐨 𝐭𝐡𝐚𝐧 𝐚𝐧𝐲 𝐨𝐟 𝐭𝐡𝐨𝐬𝐞 𝐪𝐮𝐚𝐥𝐢𝐭𝐢𝐞𝐬. 𝐀𝐧𝐝 𝐨𝐧 𝐭𝐡𝐞 𝐰𝐚𝐲 𝐭𝐡𝐞𝐫𝐞, 𝐲𝐨𝐮 𝐜𝐚𝐧 𝐚𝐥𝐰𝐚𝐲𝐬 𝐜𝐡𝐨𝐨𝐬𝐞 𝐭𝐨 𝐜𝐨𝐩𝐲 𝐩𝐞𝐨𝐩𝐥𝐞 𝐭𝐨 𝐥𝐞𝐚𝐫𝐧 𝐟𝐫𝐨𝐦 𝐭𝐡𝐞𝐦 𝐚𝐧𝐝 𝐬𝐭𝐚𝐫𝐭 𝐲𝐨𝐮𝐫 𝐣𝐨𝐮𝐫𝐧𝐞𝐲 𝐨𝐧 𝐭𝐡𝐞 𝐫𝐢𝐠𝐡𝐭 𝐟𝐨𝐨𝐭.
Have a successful week!