Stock market investments in practice.

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If someone asks you a question about the characteristics of a good stock trader, you will probably think that they will be outstanding mathematical and economic skills. Reality shows that it is a little different. Still, there is some truth in such a stereotypical view of the stock market investor. We decided to list and describe a few features that may suggest that the stock market game is an occupation for you.

You are creative.

If you like logic puzzles and are attracted to fields related to creative information processing, then you are in the right place. This type of personality will help you find yourself in the stock market environment. Culture believes that the stock market is a place filled with extremely greedy people.

In practice, there are people here who prefer to read something valuable in the evening than spend time partying.

Knowledge of mathematical principles will certainly be helpful to you, although it does not have to be your passion. You will encounter problems that will not always be an exceptional difficulty, but without certain predispositions to solve them, you will quickly burn out psychologically.

You tolerate risk.

A stock market game like any other business requires you to come to terms with a certain risk. It is a myth that a trader on the stock market earns money one day and goes bankrupt the next. According to the manual, the level of 1% – 2% of the risk is accepted. However, novice traders should go below 1% and make reasonably safe trades. Stock market investments are not so much about making money as about protecting your capital from losses.

You don't want to be a Sunday investor.

A professional athlete certainly does not owe his achievements to the superhuman effort on Sunday. Rather, they are the fruit of systematic habits. It's the same with the stock market. There is no right to exist weekend investor leading a lazy lifestyle with a laptop on his lap.

I do not hide that you can meet such people, but only because they have put in many years of hard work, hence their current results come to them quite easily. If you are only interested in money, then forgive yourself stock market transactions.

You are interested in economics.

Regardless of what style of investing in the stock market you choose, you will not escape from having knowledge in the field of macroeconomics. Even if you are a scalper holding short positions, it is worth knowing the economic calendar and knowing what impact individual messages have on the price.

After all, it is good to know in which direction to conclude a trade and how to protect yourself against possible losses that may arise as a result of misunderstanding the emerging news. Hence, a minimum of knowledge about economics turns out to be necessary.

Well, except maybe investing in ETF instruments, which is based on predicting the development of entire industries as opposed to classic trading on shares of listed companies. A lot of money is required from this style of trading, but due to the small number of transactions concluded, a beginner with a small budget may have an ideal field to practice here before investing more seriously.

You want to find an alternative to running a business.

The stock market business has its quirks and negative sides, but if you prepare properly, then you will quickly come to the conclusion that it resembles a classic business. After all, it is based on skilful placement of available funds, avoiding unnecessary costs and maximizing possible profits.

You want to run your business, and you do not really want to look after the real business, then maybe try your hand at the stock market. Or maybe it's worth it for you to invest part of your income in the stock market? If you have the right budget, turn your attention to long-term trading in stocks or ETF indices.

You are not looking for easy money.

The stock market does not tolerate people looking for access to easy money on it. Fast stock market earnings are possible, but you have to have a very absurd lot of luck. Anyway, then the market still claims its own and takes the money with a vengeance. If you have financial problems, you are pushing yourself into even more trouble. Are you investing borrowed money? This is a great way to bring yourself to mental and material ruin.

Do you have unrealistic financial expectations? Stay away from stocks of listed companies and cryptocurrencies. All the more so if you have further learning in your nose. This type of attitude will quickly turn into a gambling addiction.

What are the popular stock market myths? A few sentences about the opinion of the crowd.

A fresh trader in the stock market often believes that most of the crowd participants control the stock market resources. If this is taken as a fact, then any manipulation of the exchange rate would be a temporary anomaly.

What does reality show us? Market manipulation is not unusual, but a normal market law. You have to reckon with it just to survive. It is no secret knowledge that each exchange consists of participants of different sizes, and the value of their accounts is the driving force in the market. If you invest in popular and liquid financial instruments on the stock exchange, you have to take into account the presence of large funds and banks. Their enormous strength can make them change the direction of the price.

Will the good results of the layman only be better?

Many people involved in the stock market game, and being only at the beginning of their path, can achieve promising results. This makes great hope for further development and big returns in the future. Such expectations are usually meaningless. If a stock trader makes money (even several times) and doesn't know exactly why, how could he improve his technique?

Note that if you do not understand the operation of the stock market, and yet you make money on it, then you have a lot of luck that will end very quickly.

A small capital will not give you staggering earnings.

The word small is relative, and for each person it can mean a different sum. Unfortunately, novice traders ignore mathematical principles, believing in huge returns in a relatively small period of time. They often decide to invest, for example, several hundred zlotys.

Serious profits start with a serious contribution. To this add settlements in the Tax Office and some deviations from the expected profits. If you decide to calculate profitability, then reject anecdotal arguments that some trader in a short time multiplied his small wealth. Look at it from this side. Huge companies investing money on the stock exchange do not make profits of several dozen or several hundred percent per month. After all, they employ a number of specialists who calculate the risk and make sure that the system is profitable and as profitable as possible. When starting your adventure with the stock market, you will resolve that you will develop a work ethic similar to professionals.

Beginners and cryptocurrencies.

Cryptocurrencies have become so popular that many novices are throwing themselves into the vortex of investments with their participation. This has perpetuated the belief that token markets are a great field for newcomers. Reality shows that this belief is far from the truth.

Like other cryptocurrencies, Bitcoin also lacks liquidity. This makes their prices extremely volatile. There are also difficulties with reading the transaction record using level two data, such as the Footprint Chart. As a beginner, should you stay away from cryptocurrency exchanges? Not necessarily, although take into account that this is a rather specific type of market and you should take into account a high level of risk on it.

Other instruments are also good ways to earn.

Financial instruments exist in many different forms. It would seem that the currency exchange or company options are not necessarily the most profitable opportunities. Forex seems to be a not very safe option for investing funds. This is due to its decentralization and difficulty in accessing many valuable news.

The most popular and at the same time valuable opportunity to invest funds in contrast to CFDs are futures markets. Futures contracts are characterized by transparency and trouble-free access to information. This enables completely new ways of trading.

Technical analysis is the basics.

Beginners and unaccustomed to charts, market participants treat technical analysis as a complicated method with surprisingly good results. Advanced traders know that this is just an introduction to the field of stock market analysis, which over time will give way to other methods, such as volume analysis.

Technical analysis requires a bit of self-denial to learn the rules that govern itself. With some self-discipline, you will assimilate it in a relatively short time, and then move on to more advanced issues.

Knowledge in the field of finance, which is worth passing on to children.

To know the difference between people with financial problems and financially resourceful people, it is necessary to know the habits formed in the personality. There is a tendency. The more you are in the lower social ladder, the more you indulge in primitive instincts that want to have everything for now. If you want to lead yourself to poverty, it's best to stop caring about tomorrow. New clothes, fast food or quick shopping give a dopamine injection, which is too strong after many years of addiction.

To this we add bad associations about money: wickedness, lack of moral backbone or the dark side of business. It happens anyway, but rich people usually postpone pleasures for later. Be afraid when things come easily to you. And if most people share your opinion, then be even more afraid. The easier and more common something is, the lower it is valued.

The worst thing is that all manifestations of individualism are suppressed and dismissed by the saying "none of this will come of it".

If you stop making decisions on your own, you will go bankrupt. It is easy to succumb to the illusion of the knowledge possessed by the crowd. It's easy to believe him, to walk the same beaten path, and to fail like all the rest of the people.

Some refer to the stock market as a zero-sum game. Is the method you learn readily available? How many people use it? If everything goes easily and with the approval of the crowd, stay away from it.

Auction theory as a way to get to know the market is a hard-to-reach way. As a result, there are simply few people who base their trade on it. On the other hand, learning the principles of technical analysis will take you one day. This is the first method you will come across when learning the basics of the stock market. As a result, most people use it and, unfortunately, it usually loses its money.

A security illusion.

A person's life is like a walk on a tightrope. He balances to survive despite the difficulties. Adding to this various random cases aided by an imperfect health, political, economic and legal system, it can be concluded that life security does not exist.

Author

  • A lover of matters related to investing and finances. He runs a company dealing with financial optimization methods. Privately, a mother of four and a happy married woman. He enjoys playing the piano, music and singing. After hours he gives private lessons.

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