In the past 12 years of investing and trading in the stock market, I have learned a lot from my conversations with other women. For one, I have discovered many misconceptions about the stock market. In the interest of personal growth, I am open to learning new things. So, once I’ve discovered that what I used to think about a particular topic is based on insufficient information, I find myself opening up to a new perspective.
So, how do some women allow their mind to take them out of the financial game? Well, while our mind can be extremely powerful, its desire for security and resistance to change can also keep us from stepping out of the box to accomplish our goals and dreams.
Stock Market Myth #3
Trading in the stock market is too risky.
I hear this one ALL the time, especially from ladies who had money in the markets in 2000 after the dot com bust or in the fall of 2008. And I was one of them. I lost money in the markets during both of these periods too. But, the most important step I had to take was to determine how I could not repeat the same mistake again. I had to take some responsibility for my situation, so that I could learn from it and make wiser financial choices in the future. Something in me said that I could still make money in the stock market, AND that the key to doing so was training. Indeed what I learned from training with my mentor between 2000 and 2008 helped me to deal with the substantial drops in the market that occurred in the fall of 2008.
Risk management is extremely important when investing in any business. That includes real estate, any traditional business venture such as a restaurant or clothing store, and the stock market. As with any business, there are no guarantees in the stock market. I cannot stress enough the importance of having a clearly defined exit point BEFORE you even enter a trade. And once you select this exit point, follow it. Don’t make the #1 mistake of amateur investors – don’t be ruled by your emotions. Invest and trade based on a proven system. This is how you will protect your investment. Your exit point is not just your profit goal (how much money do you want to make?). It is also the most you are willing to lose (risk). Letting go of a losing trade is a critical part of risk management.
No one profits on every trade, because if they did they would essentially own the stock market. Even with the system I use, it would be impossible for me to be profitable on every trade because I would have to be right every time. I mentioned this in chapter 10 of my e-book “Wealth Wisdom for Ladies” entitled “You Can Be Right or You Can Be Rich.” Investing based on a system mitigates the risk, but it will never eliminate it. For me, 20% is the most I will risk in an investment before I sell the stock or ETF and cut my losses. This is how I live to trade and invest another day.
Ladies, what are your thoughts about risk?
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