The biggest weakness in financial markets is the inability to calculate risk. You probably know the meaning of risk very well, but because in real life financial risks are usually miles away from us, we don’t notice a heavy shadow in the capital market.
You think the share you buy is like buying a car, and the maximum negative fluctuation is 5 or 6 percent. You can’t believe that the share you buy can be 90% lower. Yes, it’s hard to even imagine.
You have not yet learned to control your greed. That’s why you go to the shopping queues on exciting positive days and buy shares without thinking. The fire of greed blinds your eyes. When it comes down to it, on the contrary, it scares you and makes you rush to sell.
The essence of Iran’s economy in the other sectors that you have faced the most is that prices are rising and falling. For example, housing prices have either risen or remained stable over the past 100 years, or have fallen slightly. The same goes for the dollar and the car. That’s why your mental pattern is flawed from the beginning. You think the stock market follows suit. never.
The most important element of a successful trader’s strategy must be survival.
You have a lifetime opportunity to become a billionaire in the stock market, as long as you learn to survive. You can’t win Olympic swimming, as long as you don’t know how to swim. So your first and foremost thought should be, “How do we survive?"
Guide your risk to zero for a few months. Believe me, the risk that most of you take in the first days of entering the capital market is many times higher than the risk that a professional may take after 15 or 20 years of work.
Because a professional trader has learned that “it’s enough to keep the next big market moving."
How can risk be controlled?
● There are several ways to do this, and financial advisors have each looked at it from an angle. For example, some financial experts recommend that you do not buy a single share and have a portfolio of stocks. That way, if you fail somewhere, you will win somewhere else.
● Others say you should consult financial experts at investment consulting firms and stock funds.
I do not disagree with these methods, but in practice, few accept and follow these recommendations (for a thousand reasons that both I and you are bored).
The popular version of risk management is to buy stocks and some of your money so that you don’t have to check it every day and, as the saying goes, don’t have a cup of tea in your hand and may not paralyze your life and life.
A few final tips:
● Only think about survival for up to six months. If you last six months, things will get better. I know it’s hard to start calculating and understanding risk, so I suggest that the share you buy is among the top two companies in the market in terms of “liquidity" and “size."
● I recommend paying attention to the profits of companies. For now, put aside the stories that some company is going to buy and become so and so. Compare corporate profits with bank profits. Do not choose the expected performance space. Avoid buying stocks that have lost or made a small profit last year.
● Don’t be fooled by virtual channels and storytelling. The account of many people who sit behind these channels is millions of negative Dollars.
● Read. think. Write for yourself. Try to learn new lessons every day.
● The capital market is not a good place for excitement. If you go to casinos in the surrounding countries to relieve excitement, you will be more successful than buying and selling stocks with your eyes closed.
● I say again. Your main goal should be survival, tell yourself every day, before any deal: I need to stay in the market and avoid buying stocks that jeopardize that survival.
● Before entering into a transaction, measure the potential loss and plan for it and adhere to the amount of loss that you specify.
Published and authored by FalconProfit.com
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