”20% niririsk ko per trade, kaya ko pa ba? Thrice na nawipeout yung account ko, should I prioritize my stoploss kaysa sa target profit?”
Understanding your risk and financial management is more than handling your emotions, but also being grounded with the right education and knowledge on the stock market principles. A 5000 pesos gain can turn into 20 pesos in no time if you do not know how to properly handle your account.
Here are some of the quotes or saying that may possible bring a change and a paradigm shift on your financial management
You get recessions, you have stock market declines. If you don’t understand that’s going to happen, then you’re not ready, you won’t do well in the markets – Peter Lynch
Peter Lynch is one of the known investors and mutual fund manager in the world of stock market. He is also one of the many successful investors of all time! Being great in the market does not only mean successes and understanding the market structure. It also takes one to recognize that the stock market declines and fall, and that it the reality of the stock market.
If you are not able to accept this fact, your 100k capital investment can be wiped out anytime! Why? Because you are too confident with the market and your own assumptions and decisions. To be able to beat the market is to be able to accept that even the stock market fails. Learn and re-learn your mistakes on why you are losing. Get back on the track and use your losses as opportunities
The stock market is a device for transferring money from the impatient to the patient – Warren Buffet
Even the greatest Warren Buffet explains that emotions are dangerous creatures! Being impatient is a mark of losing in the stock market. Once impatience takes over your mind and soul, your decisions gets grounded on fallacious, biased, and unclear foundations.
After that, you create poor results and executed actions. One day, you just sold out all your 2000 shares! But the next day, the market went up. Do you see the part where you lose? It was the part where you have lost your patience. Be patient with the market and be guided with accurate, reliable, and unbiased factors on your decision making.
Rule #1: Don’t lose money. Rule #2: Don’t forget Rule #1 – Warren Buffet
One thing to always keep in mind is to not lose money. How can you do that? Rather than prioritizing your target profit or reward, set your stop loss! It’s just like a child, who can’t swim with a height of 3 feet, who would be diving into an unknown 5 feet pool. Does he know that the pool is 5 feet tall? Will he be able to swim? Why would he dive into that pool?
The risk of diving is similar to your indicators in trading. You must first analyze what you are about to get into, and the reason why you are going to be diving. Just because a same kid of 3 feet have dived doesn’t mean you are safe; it is also similar to your historical prices. Everyone has their own tolerance and set of skills. You must accept that too!
The quotes above are just some of the ways you can change your mindset and attitude towards the market. This will also help you avoid or prevent yourself from creating errors or experiencing another the same mistake. May you continue to have the burning desire to learn more about the stock market!
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