To a lot of people trying to understand investing is the same as trying to learn Chinese, really really hard.
If you know what you’re doing and are willing to put in the time and effort to do your research it can be a great way to grow your money. Before you get started though it’s important to consider just what you need to be a successful investor.
To help you out we’ve put together a list of the 5 basic traits any good investor needs to have.
1. Discipline
If you’re even thinking about becoming a day trader you have to be disciplined. To succeed at day trading you can’t let emotional thinking cloud your judgment.
You have to be able to look at every trade as a transaction with specific terms. If you invest in something and it isn’t going the way you want it to you need to have the mental strength to cut your losses and pivot to a new investment.
Most day trading is just sitting and waiting. Actually placing orders and setting up stop losses might only take a few minutes every day. For the rest of the time you need to have the discipline to sit and wait for your strategy to play out without messing it up.
2. Self Direction
So many investors will talk at length about the vision of their mentor or investing coach. They never seem to realize that by letting someone else direct their investing strategy and goals they’re putting themselves in a potentially risky position.
If you don’t have the self-confidence to steer your own ship while investing you’ll never be able to pick out the best stocks to invest in right now. There’s nothing wrong with using written and online resources.
If you aren’t you’re realistically missing out on useful advice and information. When it comes down to actually forming your goals and how you want your investing to work it has to be by your own design.
3. Focus
Successful investors are focused investors. They build their knowledge base about a particular industry or field and use that to find excellent companies.
The goal with investing is to find a company that’s undervalued for the right reasons. You want a generally successful firm that’s slightly below the market value it should have.
It’s good to have a broad portfolio but that really only applies for long term investing. If you’re looking for the best stocks to invest in right now you need to understand the industry backwards and forwards and be able to explain what you know.
4. Strategic Thinking
Success as an investor depends on your ability to create long term plans and stick to them. It’s that simple.
If you have the kind of mindset that allows you to plan out your moves and carry out your plans you’ll do much better than someone who’s just good at picking stocks.
Consistency and discipline combined with a well thought out strategy trumps just about anything else in investing.
5. Resiliency
This one’s pretty straightforward, if you can’t handle the stress of losing money on a regular basis you probably won’t do well in investing. Even the best day traders and investors expect to have a certain percentage of their investments fail.
It’s not an exact science and sometimes you pick losers. If you’re the kind of person who gets freaked out by losses you probably shouldn’t consider short term investing.
The ultimate goal is to make sure that you pick more winners than losers over the long term. If you can do that and handle the day to day stress of watching yourself lose money on some investments you’ll do well.
The worst thing to do is begin investing and realize you can’t handle it. That leads to emotional decision making. That always ends with losses.
Always Know When to Sell
For most investors holding a stock longer than they should ends up costing them money. When a stock goes up it can be tempting to hang on for the ride and grow your money more. Many times this ends up being a trap.
Before you ever make a purchase be sure you know what conditions you’ll sell under for both gains and losses.
About Mohammad Mustafa Ahmedzai
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