What investors ought to keep in mind

There are an endless number of textbooks and articles as well as online journals and educational pieces written on what it takes to become a successful investor, especially in today’s every changing market dynamics. There are a number of traits which make some investors more successful than others. For example, the inexperienced investor requires courage, discipline, being able to listen to advice, as well as patience when putting his/her hard earned money to work. As for the experienced investor, there is a countless list of traits which, in my opinion, makes one investor stand out from the other. Below, by means of this article, I am hereby attempting to list the most important traits which I feel are imperative to gaining experience in this highly complex field and make the reader comprehend the sophisticated cocktail of traits required to distinguish one investor from another. The list provided hereunder is in no particular order and, in my opinion, carry the same degree of importance.

1. Have a target investment horizon and plan your exit strategy. This requires discipline, but is essential for preserving gains and serves as a buffer for when market sentiment turns, abruptly, to the downside.

2. Have a clear defined investment strategy. Every investor has his/her unique investment style, and that is fine, but the successful investor will develop his/her own investment strategy, such as based on technicals, fundamentals, short-term strategies, long-term strategies, etc.

3. Take risks, consciously. Risk-taking is where the real money is made; not knowing the risks you are taking is dangerous. Tweak your investment strategy to include risk management techniques such as hedging.

4. I have written quite a handful of pieces about the importance about one’s willingness to learn. Learn and educate on your own initiative – read, read and read. Articles, newspapers, book and journals. Attend seminars. Keep abreast with market developments. Invest in educating yourself, in having a strong financial background.

5. Learn to control your emotions. Markets are driven by sentiment. Fear and greed is what drives the average investor and ultimately leads to the herd-instinct. A good investor is not influenced by media headlines.

6. The trend is your friend. It does not matter if you are a value investor or day-trader, the trend is most likely to help you in your investment decisions. Warren Buffet stated; “look at market fluctuations as your friend rather than your enemy – profit from folly rather than participate in it” Identifying a market trend enables investors in using the trend to their advantage and could facilitate the decision to exit from a trade.

7. Be humble and learn from your mistakes. This is one of the traits which is crucial for investors to gain that much needed experience. You can never become a successful investor without making mistakes, the most important thing is to take them as part of the learning curve and not get disheartened by them and view them as an opportunity to move on.

8. Be patient. When taking a calculated decision on an investment, take the necessary time to reap the benefits of that decision and not panic on short-term market-driven volatility.

9. Stick to your investment strategy. Do not abandon it half way and move to another. Average investors tend to lack persistence and have a habit of to giving up just when they are about to achieve success.

10. Be passionate on investing. People are passionate on hobbies, sports, their favourite teams. Why not becoming passionate on investing? Investing can be viewed as a game on how to make money, be passionate, the results will follow.