Every stock investor should have a stock investing psychology.
Have you adjusted your psychology according to the stock market?
Whenever someone wants to invest in stocks he should have a
certain kind of investor psychology. As a stock
investor you
should exactly know what expects you when investing in the stock
market.
Most investors like stocks because the high dynamics in terms of
price fluctuation is very attractive to them. But they only see those
stocks which are in focus. In the latest finance news they are told
again which stocks have gained most in value. After hearing those
kinds of news some wannabe stock investors think that they
could
succeed in stock investing too because so many stocks are
rising!
The following is wrong with this way of investor attitude:
Those stocks which have fallen dramatically or are still in their
downward movement are not very interesting for financial news. But
these shares which have lost a lot in value are out there too.
So, who says that this potential investor will not buy one of this
news-unimportant stocks?
In a stock investing psychology the shareholder has his emotions under control.
As a stock investor one should have the psychology
where he
has understood that stocks can also go down and
that you are
not always right with your investment decisions. You as a stock
investor should know that when targeting a return on investment of
50% per year you must also expect a potential loss probability of 25%
per year. Are you able to bear this loss rate?
If not you should lower your goal target from 50% to 30% where
your loss potential can go down to 15% per year.
Another very important stock investor psychology is
the
control over fear and greed. These two emotions are the main factors
which control the daily stock price movements. Not fundamental
reports about our economy or the healthiness of a company drive the
stock market. Fear and Greed are the main drivers of the stock
market. Adjust your stock mentality in a way that
you forget
these emotions.
If your fear of losing money through stocks or your greed to
become rich overnight dominates then forget an investment in the
stock market as a long term loss is almost guaranteed.
Eliminate these two emotions within your way of thinking. Try that
by saying to yourself that fear and greed are deleted and that you
will be a very successful stock investor. This is truly only
psychology but whoever has mastered this stock
investor
psychology has mastered the stock market.