Every investor has several characteristics that combine to make them successful. The degree of success depends on how well you implement your strategies and how well they work.
The most important areas of being a successful investor is the method investors use for selecting shares for their portfolios.
The next vital component is the trading plan and it doesn’t need to be overly complex. You just need to know what you should do if the share price goes up, down or sideways. If you achieved this, it means that you have a contingency plan that prevents yourself from reacting emotionally to sudden market fluctuations.
The trading plan should also incorporate an overall strategy that presents your selected shares and reasons for your decision-making. To be successful in the long term, you need a robust risk management strategy and a plan to implement it.
Lastly, don’t forget that you must be disciplined in implementing them otherwise you’re setting yourself up for failure. To recap, any successful investor should exhibit these characteristics in the long run:
1. Take responsibility for themselves and make their own decisions
- Take credits for making profits and accept the responsibility for any losses.
- Learn from these decisions and improve over time.
2. Make investment or trading plans and stick to them
- Make trading plan based on reliable information and not emotional reactions that may arise from panic or market euphoria and stick to the plan.
3. Assess the Risk/Return Ratio of each trade
- Enter into investments that offer reasonable potential for profits.
4. Manage
- Identify and analyse risks of every investment to avoid huge losses
5. Allow for contingencies in the plan
- Know what to do when share prices change. The plan then dictates the actions and prevents unprofitable emotional reactions;
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