Do you want to know the biggest difference between the average investor and the profitable investor? As you can tell by the question, they are not one and the same. The profitable investor knows how to manage their emotions. Please note: I did not say that they eliminate them. The emotions are still there. However, when you use a systematic approach and practice risk management, your decisions in the stock market become objective and logical. This is the critical key to being profitable in the long run. There are three critical questions that a systematic approach will answer.
1) What stock to buy?
2) When to buy the stock?
3) When to sell the stock?
The average investor answers these questions based on __________. Yes, you fill in the blank, because their answer is completely subjective to what someone else says, how they feel, or any number of reasons.
In fact, this is one of the reasons why Cramer on CNBC has such a following. In the absence of judgment, he is an emotional guy in how he delivers information. Why? Well, as I mentioned before, the average investor trades based on emotion. So, he is merely matching the temperament of his target audience, the AVERAGE investor. And people tend to follow a person when they can identify with them.
The PROFITABLE investor uses resources and a system in their investing. I have been using a system for over 7 years now, and it has made a tremendous impact on the profitability of my investments in the stock market. I do not take anything I hear from anybody at face value. I check their recommendations based on my systematic approach.
So, the choice is yours. Do you want to be “average” or “profitable?”
All the best to you on your journey!
Aneshia