Do not too emotion in Stock Market!

Let say now you having a lump sum of fund and plan to invest in shock market.

You know market is hot for quite some time, the price of many stocks already moved up, those who bought earlier have quite significant of profit. You know currently is not best time to buy a stock as correction might come any time, it just a matter of time. Hence you wait, wait and wait for correction, hopefully can invest when stock price pull down a bit. One week, two weeks and three weeks, but there’s no pull back or correction. You can not wait any longer, as the price keep on going higher.

Finally you decide to buy now, hopefully can make a quick profit when the price go higher, maybe it will continue to go up for few weeks and take profit to sell it for quick money, buy back when it go down. This is very good idea, ya?, what’s a perfect plan. However, most of the time, you tend to buy at high price when the stock price is up and sell when the price go down, though sometime you earn some pocket money. There are many investors out there having the same idea, the clever idea but continue doing the same mistake.

When market start the down trend, everybody sell like no tomorrow. Some will just sell and hope to buy back at the lower price... panic! Some may not do anything, but feel worry to see their wealth keep on decrease in value. If this happen to you, then you could have lost the fun of investment and creating pressure yourself. Follow market’s trend will not going to make you rich!

Smart investor know that market’s movement is just the change of number, be it up or down. Serious investors are more concern about the future profit of company instead of short term price movement. Do not let the stock price control your emotion. Do not let the fear or greed control your emotion. Control of emotion need to learn from experience, meaning you need to learn from the mistake. To overcome this, I suggest investors to write down your plan before invest / buy a stock. Write down the reason why buying the stock, if you decide to sell, record down why you want to sell. Finally review the result, be it earn or lost, review the result and action plan. We can learn from our mistake by doing so, the idea is don’t let it happen again in future.