CAPITAL / CASH TO INVEST
Historically, long-term investors always win in the market and gain a lot more than the traders, since trading and timing the market can be painful sometimes. The market can slap anytime unless investors are prepared to defend against any kind of attacks in the market. Investors’ capital is one of the most important things to invest in the market when the market is cheap.
Think, you really want a piece of “pie” because it is so sweet and it has all your favorite flavors added to it. The only problem is, you don’t have enough capital to purchase the “pie”. You work so hard and raise some capital to buy the pie, but by the time you went to the market and tried to buy the pie, the price went double because there was less pie in the market and the value was added to the pie, and now you have to pay double for that same piece of Pie.
The scenario tells us that if you don’t have enough capital when the market is selling out or discounting its price, then you will always be paying higher capital for once cheap stocks.
EDUCATION & RESEARCH
The most important thing in the market when it’s volatile is to have some knowledge of what’s really happening in the market. If you are not aware of the market situation, you may be missing out on some information that could make you pay over the long term.
Investors should always research new information and study market data over and over. Think investing like your business and be ready to study more for your business. If you can’t find a way to grow your business, it will be hard to make money in the market. Simply copying other users and trying to do what they are doing is not an investing strategy, in fact, you should always find a better way or learn different strategies, since everyone is different.
Here are some steps beginners should start doing immediately:
- Treat investing as your business and you are the CEO of your business.
- Wake up early and start positive day. Take shower early in the morning, before market open 9:30 EST, should be done by 8 AM EST. You should always be fresh and come up with open mind and ready to learn for the day.
- Start researching the market, check premarket future, oil price, Dow Jones, S&P and so on.
- If you are intrested on any market side or single stocks, do more research on those stocks. See if the company announce any new news or if there is any negativity around the business in premarket. This gives perfect opportunity to either invest or take advantage of stocks/market when the market open at 9:30 AM. This stragity works for traders and investors since traders can take advantage of day to day trading and long term investors can take advantage of long term portfolio and growing with plans.
FEAR AND GREED
One of the most important things in the market is to be mentally prepared for any situation in the market. Beginners are always in fear of losing money. Beginners think that when the market starts showing red, it’s time to sell, or when the market starts showing green, it’s time to buy.
It’s like buying the “pie” when the price is double and just staring at it when the price is so cheap until the price goes up by 3 times.
Fear and greed should always be in control of day traders, swing traders, and even long-term investors.
Long-term investors invest in the business with fundamentals and business balance sheets. Greed comes when the investors start thinking from their emotions instead of using their brain and do the math calculations. If the balance sheet reaches somewhere where it does not make any more sense, or something big change in fundament, that’s the time investors may think of selling the stocks, but some greedy investors think something good might happen again ” using their emotions” instead of brain.