Emotional Investing Is Your Own Worst Enemy
Emotional investing is your own worst enemy
Investing can be a thrilling factor for amateurs; to make them feel high. No time is same for any investor; no one can get high and make money at the same time. Emotional trading is the weakness and it is your worst enemy. Greed and fear are worst things and they are bound to demolish any entrepreneur. You need to be intellect and practical while making investment decision; rather rely on gut feeling. Control your emotions of greed is the key for investors and if you secede in this, then you are on the track of success. Every one has a tendency to follow the majority, it is natural but when you are involved in investing, following the trend may be too risky; some times proves to be non-productive. Trend following in investing is fruitful when there is no resistance in the system. The smart investor always knows when to follow trend and when to sell before trend reverses.
This is a general belief that, there is a safety in numbers. Most of the traders inherited this legacy that, working as a group and follow the crowd is secure and it is the only way to survive in market. Most of the people think it is adaptive. There is a certain level to follow the majority, some depends too much and some depends too little. But it totally depends on the situation, to decide which level to strive for. Blind obedience is not beneficial all the time; you have to decide when to follow the market blindly and when to withdraw. For example, when you are investing in long term instruments, you need to invest in those stocks that has low volatility and all the fundamentals indicates it will remain constant for many years and large amount of people believe that stocks will give returns for many years then you can trust crowd and follow them blindly for safe investment.
To earn big profits without taking too much risk is a challenging task for investor, always follow the crowd will not the way to earn big profits, there are times when an investors avoid blind obedience. In order to make good profit, you need to look for volatility and its only possible when you go in your own way. The crucial thing is that how to decide when to follow the majority and when to go in your own way. The challenge is to predict when turning point will occur; most people say it is impossible to predict the turning point. But you can reach closer if you develop a sound trading plan to capitalize this opportunity. We can develop series of sound methods to view the market from all possible angles to predict turning point. The key is to develop method which will work most of the times. This series of methods can be technical indicators, media news and hypes, risk control methods, and combination of all these. All these methods need great deal of knowledge of the markets, extensive experience and skills of trading. Decision of going against the majority and working on your on methods, needs especial kind of personality, personality with fearless decision making, personality which doesn't need reassurance from others, and personality with higher level of confidence.
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