Becoming rich through investing or trading is only possible if you really make the effort to develop yourself financially. Invest in yourself first. The more you invest in your own development, the greater the chance of good returns and success on the stock market. With a strong financial foundation and experience, you can certainly become very rich in a short time. Only practice shows that this is reserved for a small group of people. Why is that anyway?
Good luck on the stock market
A lot of research has been done on successful investors. It turns out that it is not so much the method or market that makes these people successful. It mainly concerns the personal competencies that these investors have. In addition, they often had to walk a long road before they were able to consistently generate large returns. If it were easy to get rich through investing, many people would no longer work. Not everyone wants to take the time or effort to see investing as a real profession. People often prefer to invest their money rather than investing in their knowledge and development. And that’s probably one of the main reasons why so few investors are truly successful. But this offers opportunities for people who seriously want to build wealth. Who are willing to go through the necessary process that every major investor or trader has had to go through. You must continue where others give up.
Take investing and trading seriously
Many books and articles have been written about investing. These generally concern two aspects of investing. The first aspect concerns information about, for example, financial products, fundamental analysis or technical analysis. The second aspect is about how you as an investor can achieve better performance. For example, you will receive 10 tips for better returns, common mistakes or a completely new methodology. Both types of books are important. It is important that as an investor you have sufficient knowledge and learn from the ‘masters’. Many of these books give you an advantage over other investors. The books are essential for your development. Yet you must also dare to be critical. Also dare to develop your own vision and do your own research. Researching quotes, companies and markets is crucial. You have to make the decisions at important moments, there are no stock market gurus or advice that can tell you what to do. You pay the price for the choices you make! Make sure that you make choices independently.
Knowledge of the stock market and trading
Knowledge is essential before you start investing. You gain knowledge in two different ways. Firstly, you have to do targeted research. There are countless financial products, all of which have different advantages and disadvantages. When we talk about options, you need to know which options are too expensive and which are cheap. Which options can best protect my shares? In other words, which delta corresponds to my underlying value. This knowledge immediately delivers your first return! You save a lot of money by making calculated choices. Many investors do not have this knowledge and lose a lot of money unnecessarily, even though they had a good vision of, for example, price development. As an investor you can never know everything, so try to stay focused. It takes enough energy and time before you really understand how options work or, for example, get to know the characteristics of the AEX. If you have sufficient basic knowledge, we come to the second important aspect of knowledge, namely; knowledge through experience.
Knowledge through experience
You can read piles of books about investing, but the money is really earned on the stock market. Experience is extremely important. First and foremost, you get to know yourself. And that can sometimes be a tough test. Making or losing money on the stock market: it does something to you. The only question is what it does to you and how you deal with it. What steps do you take if it turns out that your capital has halved? Do you see this as a lesson and do you change your behavior or do you take even more risks to make up for losses? You actually only lose if you don’t learn from your mistakes. Everyone loses, some more often than others. Make sure you have a learning attitude towards wrong investment decisions. Because a well-known saying on the stock market is: sometimes you learn and sometimes you earn.
What type of investor or trader are you?
It may sound contradictory, but day traders, for example , are often people who absolutely do not like risks. That is why they withdraw their capital from the stock exchange before it closes to avoid overnight positions. To find out what type of investor you are, you can take a test to determine your investor profile . You will then find out whether you are speculative or risk-averse. In practice, however, you often see that investors make different choices and are not risk-averse or speculative at all. In short, the fair is the best teacher and shows who you are. Be honest with yourself. If you anxiously count the euros with every price movement from early in the morning until the evening, you have to ask yourself whether you are not being too speculative. Make sure you take positions that keep you relaxed and calm. Take good care of yourself and your capital. It is easier to get into the markets than to get out. So take every transaction seriously. Evaluate transactions and have a plan B if everything doesn’t go as you expected.
Golden combination: knowledge and experience
Actually, real money can be made now. You have gained the right experience to know how you function in the markets. You are guided by the markets, but you are not a plaything. Based on this experience, you have developed and tested strategies. The method you use ensures that you can invest with confidence and peace of mind. You know how to reduce risks and ensure that you tailor your portfolio as best as possible to market conditions in every situation. The self-confidence you have developed allows you to go against sentiment and seize opportunities that the masses ignore. Your bank account will be a reflection of your knowledge and experience that you have used to the fullest.
Investing should be done with passion or you should outsource it. Try to enjoy the process and learn something new every day!