today we are talking about three simple rules for better trading decisions
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Hey everybody I'm Sam and this is Entiversal today will try to figure out a simple
strategy that we can follow when we're trading our investments and by trading I
mean buying or selling the act of buying or selling our investment and I won't be
talking about you know how to actually make the decision if you want to buy or
sell but just the act itself and the thing is that the actual trading is much
more a psychological barrier and a problem then it is actually a fundamental game of
facts or numbers and there is a big problem in that because the rules I tell
you about in the things that we actually need to fight in order to be successful
are very simple but they are very hard to do because people we are herd animals
right we are social animals and we have a herd mentality but in order to
actually be successful in trading we have to find our own human nature our
own human psychology you have to detach yourself from the herd mentality and go
against it you have to detach yourself from the emotions that you feel toward
your investment towards you know the environment around you and even towards
other people you know whatever the people telling you about your investment
or just in general you know you might be in a fight with your spouse and you know
you might be angry that shouldn't affect your judgment and that's very very hard
to do even though it's simple to say right and you know if you ask someone
probably most people will tell you no buy low sell high and you'll be fine but
it actually is a little bit more difficult than that and you know if you
have tried to create some kind of stocks or whatever investment then you probably
have found that out so the first thing I want to talk about that we need to fight
with all our hearts and minds is called fear of missing out and that's something
that a lot of people talking into quit Curren in society but it is very true
whatever you're looking at and the fear of missing out is when you have made a
decision that probably some kind of stock or investment is good for you and
you want to buy it in you're trying to time it so overall I wouldn't advise
timing an investment okay if you feel that this is a good investment just
invest your money into it but if you're trying to time well when to buy and you
see the investment just rising and rising the fear of missing out will urge
you with the herd mentality to say oh my god that's been going and I've been
waiting and I've been missing out gains so let me buy and you buy and then the
next day correction happens and it goes down 20% or 30% and you feel like the
stupidest person on the world right well yeah that's a problem
so never buy because you fear that - you're missing out gains by based on
fundamentals and thinking for the long-term because if you buy based on
fear of missing out then on the next day when correction happens and things that
go down you'll be like oh no I just made a good decision you lose confidence
which is something absolutely very very vital in investing and then you start
following the herd mentality it's AB psychological game you know you don't
even realize how you get into that and once you start following the herd
mentality we'd get to our second point which is never sale because of fear you
know because fear is very contagious you know people start talking to you
you know this investment is bad you know if you'll notice that all the bad news
start coming out after a stock starts to going down right you know something
happens your investment starts going down and then there is all those venues
all the sudden coming out in nothing and it starts going down that's
contagious in people with herd mentality start selling so it goes even warmer and
then obviously bought in you know financial institutions are selling to
the goes even lower and you know it's very contagious in if you fall that you
start selling because of fear and that is the worst decision that you can make
if you have investment for the long term and because of fundamentals the
short-term fear doesn't affect you in any way just shut it down you know don't
pay attention to it or pay attention to it but you really have to have very
strong mentality so firmly the second thing that we should fight is absolutely
never seven awards because of fear I would say absolutely never if you have
to say on awards it has to be because something absolutely fundamental has
changed with your investment for example if you invest into a company in nareta
walls but you know something absolutely terrible happens you know they lose
their product they I don't know their CEO goes on a rampage I don't know
whatever happens and then yes you probably should sell an award but never
sell because of a fear and I could expand that and say even if you have a
gain never sell because of what other people are talking because of sentiment
I would say absolutely the opposite thing by the fear and then there comes
you know the most famous quote Warren Buffett right be fearful when others are
greedy or in other words don't buy on fear of missing out and be greedy when
others are fearful in other words by the fear by when prices start to go down
because of some kind of sentiment instead of fundamentals and that is very
important thing I mean that is absolutely applicable even to most
speculative investments like currencies for example because sometimes there are
a lot of news that might appear and then prices that go down but that's
absolutely fear that basically changes nothing into the macro perspective by
the fear so always go against the herd mentality and that doesn't mean to buy
sh*t investments right but just think about it and be smart about it
and the last thing but probably the hardest of them all is don't be greedy I
mean if I can make one slogan that I would like for the whole world to see
and to remember is don't be greedy and that's very hard and it's very hard for
me because you know you lose it you know there is this excitement you know that
happens when you're on a game and you just lose it and how can we actually
apply to our investments well if you have both and you have a good game you
know it no stock that might be 30 40 50 per sentence and kind of other
investment I don't know if you encrypt the currency that might be hundred two
hundred three hundred percent whatever it is if you've invested into something
and you have set some kind of a window that you think that is a good profit in
your somewhere around that let's say it's 50 percent don't be afraid to take
some profits out don't be greedy don't leave all your investment into the same
place even if you're not sure that will keep going up and you'll be like it's
going up maybe I can make some more profit and how to actually decide where
we are selling because of fear and when we are holding because of greed that's
very important thing you sell in fear when things start going to sh*t in your
staying because of greed when things look amazing in that's very pliable two
bubbles right and we look at the charts in a second but you know Bobo happens
and you're writing it you have an amazing gain don't be afraid to take
profit and I would say in order to find the best time for this is always
reevaluate your position on some kind of sets milestone let's say on every 10%
gain you know look at the numbers one more time you know we look at the ratios
look at all the fundamentals that you take into consideration which we
investing into a stock detach yourself from any kind of emotions and just
decide would I buy the stock now at this price for the first time and if the
answer is absolutely yes then okay probably staying through your stock
whatever investment and if you see that there probably is more upside but you're
not as sure as before take some profits and leave the rest in so you can see how
things are going and if you say okay it's a bit overvalued now probably
should get out just get out you know it's never a bad thing to make a gain so
to summarize it feel rules that we should be following
when were trading how investments is never buy because of fear of missing out
and be careful when you're buying on an uptrend because you might have to be
more fearful when others are greedy number two is by the fear you know when
something is going down because of sentiment and because of fear and not
because from the mantles by the fear be greedy when others are fearful and the
third thing is do not be greedy with your own investments when you are making
again do not be greedy do not be blinded by the profits detach one more time of
any sentiment and emotion for your own stock we evaluate and if there is more
room to grow and it is still undervalued maybe leave all your money or leave 80
percent whatever you decided good if you see that maybe there is more upside but
it's not as clear as before maybe take 50 percent out or you know some kind of
amount of the gain and leave the rest to see how it develops and if you see that
overvalued and you know you made a good game just get
out that's it and let's look at the chat and I've opened sa p500 chat from 1991
to 2018 and we can see those trends very very good you know if you invested back
into 94 or 95 you know you're rising up you're making good profit maybe don't be
afraid to take some profits outright and then there is something happening big
fear right never sale because of fear itself right so here we're going up and
in the same time by the fear by the fear ok we're going up don't be afraid to
take some profits out something is happening here and that's the dot-com
bubble basically but you know once more don't sell because of fear because even
if you both at the absolute top 2000 you can see that you'll be making money in
2013 and you know that's a lot of time obviously and so on but it's better than
you know selling here then buying back high then
selling again and then you are actually losing money instead of making money
right so one more time by the fear don't buy on an absolutely
uptrend just because of fear of missing out always evaluate and then don't be
greedy you know you can see what is happened into the last two years it's
been crazy the upside it's never been such a big upside is in the last two
years so probably don't be afraid to take some profits out that's what the
chart is saying Nasdaq the same thing you know you invested back into 98
dot-com bubble you're making crazy money well probably it's starting to get
overvalued you probably should be getting out of your position or maybe
just reducing it you know don't be afraid to take profits out don't be
greedy right at the same time it's going up like crazy don't buy
because of fear of missing out you might have to wait a year or two but then you
might be able to buy it for much cheaper right and as we can see from four
thousand and five hundred it goes down to 1000 and 100 so that's crazy that's
crazy right then one more time you know or what the fear what the fear by the
fear and we can see how that develops so overall that's my you know simple
strategy when buying or selling an investment and it is simple but it is
very hard to do and the most important thing I want to focus on is always I
would advice for long-term investment you know based on fundamentals and when
you're doing that don't try to time the market so you know
take a grain of salt with the fear of missing out obviously all of those
things have nuances and are depending on the exact situation that you're in but
don't try to time the market don't try you know to sell because of fear of
father's because you think that you'll be able to buy back again do that only
if you're seasoned trader and if your season's trader you probably are not
listening to that so you know that makes sense you have to detach yourself from
all the emotions and that's very hard thing to do because people we're social
we are emotional I hope this episode helped you to understand what's really
happening and hopefully will make us a little bit more gains
stay Entiverasl - on the path to greatness!






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