Don’t let emotions take control

The fear of losing money and the thought of ‘somehow’ making a quick buck before the market closes or trying to square of days losses by trading again and again – these are very common things people start doing once they start investing in shares .Ask any beginner – he’ll admit of doing what i said above or ask any seasoned investor – he would recall doing this mistake in his early days of investing. if you are doing any of these , emotions are taking control over your thoughts and you need some help Because ,these thoughts induces you to act illogically and prevents you from thinking clearly about how an action (buy or sell ) affects your financial position.

Frankly, in the early part of my investing career, at least 15 years back, I’ve gone through all these. I would buy a particular stock after doing some research, totally prepared to hold it for some time , but, as i see the price fluctuate , fear automatically steps in. I keep asking to my self- ‘Did a make a mistake?’ Finally, unable to hold on to my nerves, i would end up exiting that position. Then, at the next moment, i’m in a race to somehow make a quick buck before the market closes- to bring back my capital position to where it started.

So, what’s the remedy?

There are a couple of steps you can take to stop or limit the influence of emotions on your investing success.

USE AN ADVISOR.

A financial advisor can tell you “no” when your emotions want to chase a stock and remind you of your investing objectives. They can help you set your objectives so you have something to measure trades against.

MAKE A PLAN

Make a plan that focuses on your objectives. This is the do-it-yourself version of getting a financial advisor. The plan should address your objectives and any trades should be measured against the plan to see if they meet your objectives or not. Hold up any investment decision to the plan to see if it fits or not. If you are prone to fudging, you might have a spouse, partner or someone else hold the plan and make the call on whether the investment meets the plan’s objectives.

COOL OFF

Wait 24 hours before you make any investment decision that isn’t part of your plan. It’s amazing how different an investment can look after a good night’s sleep – and remember, there will always be another deal

NEVER COMPARE

Never compare your profits with what your friend has made . Your friend may be speculating or he may be experienced than you. Stay cool with the promise that you’ll also make it big one day and keep making fundamentally right moves.

REMEMBER …

The stock market is always there and it keeps giving opportunities every time. If you miss the bus, don’t worry. Wait patiently till the next. What is more important is that – you should be there when the market calls.

You may like these posts:

  1. Investment advisors- An introduction.
  2. When should you start Investing?
  3. What is investing?

Leave a Comment