When a Trader Turns an Investor
Right from my school days, I was passionate about stock markets. The graphs in newspapers and television used to amaze me and how money happened along the way. It was a naive curiosity. Back then, you didn’t have the resources or access to master it or arrange for a brokerage account. College education had bits of information. Later on, Finance lessons had portfolio management and related sessions. But stock market trading and investment processes always remained cryptic in my mind.
I had discovered behavioural finance basics by then, and it intrigued my interest further. How human emotions can play an active role in trading and investment. After I started working, I began handling Demat and Trading account-related operations, and things started to fall in place. Fast forward to 2018, after I left my line of work, I had decided to spend time pursuing trading. I was all excited to experience the adrenaline rush.
I had a good run for a year as a commodities trader. My learnings from the period would mark another post.
As I started to spend more time, I felt a need to move to a long-term perspective instead of going on as a trader as I felt a personal conflict in the approach I was taking. The shift felt like a real challenge to me as I had got wired as a short term gain person. The objectives and approach have to change inside out. I decided to take it slow. It depends on the individual. Some people can handle both, while others will need a lot of practice and patience to find a footing. Slow and Steady indeed makes the winners.
Here are a few things I have found out that has helped me to make the transition
Make Invested decisions: Learn the stocks and market and wait for the right entry. Do not go after hearsay, isolated information or assumptions.
Cash is King: It’s okay to have idle cash in your trading account. It’s okay to hold it till the right time to move it. If one has money, it doesn’t mean you need to invest it. It is always beneficial to have liquid cash than a poor investment choice turned bad and losing money.
Stay away from news and tracking market movements often: Its normal to have market dips and corrections. You need not keep track of your portfolio all the time. Fear and Greed make you commit a mistake. Make a concise plan on how frequent you will check your portfolio and decide your actions in the reviews. Never shy away from cutting off a looser position. The tracking frequency varies according to the goal.
As you try to find your next catch, keep your eyes open and see the emerging scenarios around you, The economy and business. You will find your winner!
