The digital space is flooding with news and ads telling people what to buy and where to invest, telling people lots of inspiring things that investing is a fast and easy way to get some extra cash for a living.
Well, as a retail private investor who is writing this article for fun and educational purpose only, I can prove that taking actions towards your personal investing is a smart, logical and rational path any person should take. However, is that way as fast and easy as they claim?
Let’s look at the current situation we are in. If you are an average person who barely keeps economic indicators in mind everything seems to be horrible, the economy is down and markets crashed, and nobody knows what will happen next, right? In some way you are right, however if you simply go to google and type in “SPY chart” (S&P500) and look at the chart for the past year you would be surprised. In simple words, SPY is an index which reflects the overall stock market behavior together with other indexes such as Nasdaq and DJIA etc. You will spot a significant drop of 43% from highs in SPY in 2020 and a huge bounce of 53% from lows just in one year itself.
You may ask yourself why is that happening if the economy is in turmoil? Why the market is rising? Well, the answer is pretty simple. Economy and stock market is not the same thing. Stock market does depend on the major economic indicators but it has its own behavior, mechanics, and the reasons of its behavior frequently can’t be connected with economy itself. This means you can invest and handle your own positions knowing little about the economy itself.
What you should and have to know is the set of stock market rules, mechanics and reasons of its behavior which is mostly based on people’s psychology, and understand that there is an ineffectiveness in stock price movements. Market moves in cycles. It has patterns and reiterative events which happen over and over again. If you know how the system works you just follow your strategy and grab your benefits. It is a rinse and repeat process. But you need to be professional to know all of that, right?
Probably, most of you are professionals in your own fields, you studied for a long time to understand things and become experts in particular specialization. Was it fast and easy? Was it fun and effortless? I don’t think so, as you dedicated certain amount of time and money to get to the point where you currently are in your profession. Why investing and trading must be easier than your current profession as they claim?
Nevertheless, there are still ways to get to success in investing a bit faster and a bit easier. And the answer is definitely not self-learning. Find a mentor. The easiest way for a newbie trader to find a mentor is to follow the next rules:
If you follow the steps above you will avoid lots of mistakes, save your money, create the right attitude to personal investments, build the right market insight and psychology and eventually your trading will bring you joy and profits.
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