Tips in Making Logical Decisions in Stock Trading
The stock market is so volatile that for many years, you’re enjoying steady profits and all of that can come crashing down in just a day.
When that happens, people go all emotional and panic, making decisions that will really hurt their financials and their stocks.
But, what are you going to do to help you stay calm in these situations? Today, I am going to talk about some tips that can help you make logical decisions in Stock Trading especially that involved all of the stock broker companies in Malaysia.
1. Know That This Can Happen
Sudden market crashes and recessions can happen, even at times that you really do not expect. That is why investing in the stock market can be quite stressful, especially for people who do not have a high pain threshold.
However, given some time after the event, people still experience this post-traumatic stress disorder about the situation, debilitating them from doing what needs to be done in order to get back in the game.
This is actually normal as a crisis can trigger people’s traumatic memories and feelings. But to help you cope with the situation, know that recessions and market crashes can happen- but after a while, the market goes back to equilibrium.
2. You Shouldn’t Let Your Portfolio’s Peak Affect Your Decisions
There is this concept called Peak in the stock market where stocks receive their highest market value. Some stocks can actually experience this and people who own such shares are pretty happy about it.
But, there will be an instance where the prices of your stocks fall below the peak. The problem is that even if it is a common occurrence, people get panicky and they end up selling all of their stocks at really dirt-cheap prices.
This is a huge mistake and one that can really put a dent on your finances. The best way to deal with the situation is by ignoring this concept of Peaking and follow your original investment strategy.
What I mean by this is that your stocks can reach its peak but it can also fall down from it as well. You can either buy undervalued stocks and sell them later or you can just hold off from trading for a while until such time that your stocks will raise prices again.
3. Don’t Watch Troubling Financial News
One strategy that news media outlets do is to invoke fear in the viewers so that they will act, mostly, in irrational ways. This can be true for financial news. When there is something negative to report, the media will always deliver it in a way that can cause unnecessary panic.
If you can, avoid watching financial news and just use some tools for analysis instead. If you cannot help it, just minimize watching such content on a consistent basis. You can check the happenings on a monthly or even yearly time frame.
4. Stay Calm and Continue Investing
The main takeaway here is for you to flush out the negative news and continue investing. Remember, market crashes can happen at any time, but they usually get resolved given enough time.
Just remember these words when a time of great stress when it comes to stock market trading comes: “Keep Calm and Invest on.”