Ever since the pandemic started, I was able to work from home. I’ve had the opportunity to research the stock market a little more than usual and put into practice the things that I researched. Most of us have some knowledge about the market. Whether we have a portfolio managed by an outside group, a 401K or we self-manage our owns account, we understand that if the market goes up, we make money. And if the market drops, we lose money. The old saying ‘buy low and sell high’ rings true and even truer if you have followed the market recently.
But what I have learned is that there is so much more to investing than meets the eye. There are tons of different ways to invest and therefore tons of ways to make (or lose) money. The more I followed the trail into the market, the more I got overwhelmed with information. Here are a couple of things I have learned:
Find your own style
From long term investing, to quick 5-second trades, there is something for everyone. One of the best pieces of advice I received as I started my journey into investing was: ‘find out what you are good at’. Or in other words, take a hard look at yourself and figure out how you think and how you act.
Here are some of the questions I needed to answer: Do I usually need a long time to make decisions? Is it hard for me to make quick impulsive choices? Do I enjoy being flexible with my life or do I set certain plans and always stick to them?
Introspection
These questions started to help me understand how I work and how I think. And then I translated them into trading. But I found that these questions helped me with normal life as well. Once I started to understand what I was naturally skilled at, I could start to think about what my life could look like if I did things that fit into my skillsets. These aren’t skillsets that I have learned or practised, these are the qualities God has innately created you with.
Failure and perception
There are so many ways to see and perceive the market. Therefore, there are many ways to capitalise on said perceptions. What one person sees as a terrible idea, another will see as an opportunity. Whatever we perceive is what we will act on.
Two questions we should ask ourselves: ‘What do I perceive?’ and ‘How do I make the most of this perception’. You will quickly learn if your perception is correct or not, based on the results.
In order to test my perception I need to put something at risk. I need to try and learn from my experience. In the market, the thing at risk is money. But in real life the thing you risk could be being wrong, making a mistake or looking dumb in front of someone. But you wouldn’t know until you tried and failed.
Failure isn’t the end, it’s the beginning.
When I first started trading, I always thought that the market going down is bad, especially if it was a stock I had bought into. But, I quickly learned that something going down isn’t bad, but rather, it’s an opportunity if I learned to trade it correctly. Failure taught me quickly that my perceptions were wrong and I needed to learn to see the opportunity and change my perception.
Don’t overtrade
Finally, don’t overuse your abilities to the point of exhaustion. Your mind is your vehicle through this life and it needs time to rest and relax. When I first started trading, I would trade from the opening bell at 9:30am till the close at 4:00pm. What I found was that later in the afternoon I would start to make bad decisions. My mind wasn’t in the right headspace and I would ‘overtrade’ by making stupid mistakes.
Make the most of every opportunity
My mind and body were telling me to stop and rest. I needed to understand myself well enough to take a break. But, this also taught me to make the most of every opportunity. What if I took advantage of the morning trades? Then I wouldn’t need to trade in the afternoon and therefore I wouldn't ‘overtrade’. In normal life this has helped to make the most of every opportunity. Why not try your hardest or go for something you usually wouldn’t? If it fits into your skillset, then go for it!