“I’m involved in the stock market, which is fun and, sometimes, very painful.” – Regis Philbin
Stock market is a dichotomy by itself.
For some, it is a place that offers a great deal of wealth and success – while for some, it offers a shattering view of failure in reality.
Why such difference?
We have to remember that success does not come to you easy in the stock market.
It takes a great deal of time to know how the stock market could work for you.
What works for you, most probably won’t work for the next person.
This is because our wants from the market are different – so is our understanding.
The first thing to understand about growing wealth is that it should be a slow and steady process.
A short cut to wealth would inevitably result in utter disappointment at the end.
Take small steps to success consistently. Stop and reflect on where you can improve and how.
The trick is to update yourself with the ways of the market.
The stock market is a dynamic entity.
To know it is to accept its ever changing nature.
Through the course of this post, we will be looking at the top 3 ways to make Long Term Investing a success for you.
These tips have been fine-combed through a cluster of several strategies that have proven to be successful to investors all across the globe.
Let’s look at them and try to analyze how each one could work out well for you!
Most seasoned traders in the market would agree that given the volatile condition of the global market today, diversification is the only way to stay afloat.
Diversification would obviously mean loving some of your investments – while letting go of some.
Hence, you never really get tired of your portfolio.
There is always room for improvements and adjustments.
The first rule of a diversified portfolio is not putting all your eggs (by this we mean your investments) in a single basket.
We must always opt out for different kinds of investments – rather than focusing on just one.
Opting for a mixed bag of individual companies is a popular way of diversifying one’s portfolio.
While choosing this method, it is important to have a balance in the choice of industries based on the global economy.
Also note that your choice of diversification takes you to industries you aren’t too familiar with.
This way you give yourself the opportunity to learn more about investing in a different industry.
The reason behind making such a choice is to not overweight upon an industry that you’re most familiar with.
There are four more popular Diversification methods when it comes to long-term investing.
To know more, read the complete article here : http://stockmarketsignals.com/diversifcations-portfolio/
2. Long Trading Horizon
When it comes to the stock market, irrespective of whether or not you have a diversified portfolio, there remains a play of inherent volatility.
There is no clear way to stop this.
If we look at past market data, we can see how during times of large returns, there is still a significant amount of losses.
This clearly shows how volatility remains an integral part of any market.
3. Absolute Calm
Someone once proclaimed how you work under periods of stress, defines you as a person. It also points out your strength.
This is probably the only instance when being instinctive can work out against you.
Let’s look at a few pointers to elucidate this very point.
a) The market comprises of you and me – basically, common people.
We make the market.
When person A buys, person B sells.
This chalks out the entire rhythm of the market.
Remember this and don’t be intimidated. Understanding crowd mentality can take you a long way in the market.
b) People being the integral part of a stock market, they control the way it functions.
Remember that the integral driving force behind market movements, usually short-term, is human emotion.
The fear or greed of a large group of people, who have started following each other’s actions in the market, can bring a market down – or help it rise higher.
One of the most first things you must do with the onset of a bear market is to keep a cool head.
Be patient and make sure that you do not make hasty decisions during this time.
Most traders, in a fit of anxiety, make extremely wrong decisions and this in turn causes their capital to suffer.
These fundamentals have been tried and tested – through the years, they have gained quick popularity amongst many seasoned traders.
Adopting strategies and investing in defensive trading mechanisms would not only add to your knowledge of the stock market but also limit your losses during a bad market phase.
Keeping your expectations in check is another vital detail most traders forget to remind themselves about during a bad market phase – lose your anxiety and patiently wait for the phase to pass.
To read more on investing strategies like this, go to – www.stockmarketsignals.com/blog