Whether it be NASDAQ or NYSE, institutional investors drive the main market. The market has seen great booms, followed by great fall downs. However, the proportion of retail investors in the market has grown with time. The retail investors are driving around as of March 2020. It might seem a small number, but the participation rate has increased significantly.
This has both its pros and cons. Whatsoever, a smart investor always finds out a way to effectively utilize the advantages available.
In the article below, we have provided an investor’s psychological mindset, which can help you grow in the long run.
Diversify Your Portfolio
Investors have always been great at dealing with the return calculation. However, one thing that almost everyone misses out on is the Risk-Return management. Without proper evaluation of the downfall, one ends up investing all his money in one stock. This habit has caused many to lose their savings.
One of the best mindset of any professional financial manager is diversifying their investment into different economic sectors.
One can channelize his investment into different sectors like Automobile, Hospitality, Banking and Finance, NBFCs, and others. With this, the person is lowering the risk of downfall. Even if one industry is hit hard, the rest of the sectors can take care of his portfolio.
Use the EIC technique
The EIC tactic refers to Economic-Industry-Company valuation. This metric focuses on the ideology that corporates use to value their investment. The valuation process starts with valuing the country’s economic/political condition; if it is sound and stable with excellent prospects in the future, invest in that economy.
Done with the country, one must look into the sectors driving the economy for that country. One person should also lookout for new industries that have prominent growth prospects in the future.
Now the last step includes the investor to find a company with good management and strong financial statements. This way, he is making sure that all of his money is in the right hands.
To avoid all the hustle of research work and analysis, one can use mt4 trading technology to provide all the reports. It is an effective way to speed up the whole research process. This way, one can further research different stocks in the market with great potential.
Have Realistic Expectations
One of the rookie mistakes is to keep unaccounted expectations from the market. A person can expect to gain 5-10% out of the market daily. People do indeed earn that kind of return. However, with the increase in return, the risk involved increases as well.
Therefore, keeping a minimalistic expectation from the market can help a person play safe and be a long-run player. It is normal to keep an expectation of 1-2% every day.
Be fine with the loss
The market is vulnerable. We have seen people selling out their stock on unrealistic news due to mass behavior. This can wind up a person with a huge loss. However, the idea should always be to hold the stocks for the long term. With this basic mindset, one can avoid all the unrealistic fluctuation of the market.
Even if a person has to bear a 2-3% loss in the market, it is pretty normal. Being 100% right always shouldn’t be the goal. At the end of the month, your net sum should be profitable.
Disciplined Approach to Investment
With a disciplined mindset, one can make sure that their investment plan is as per the routine, and no extra sum is being invested. Using the mt4 trading application, one can make sure to effectively utilize his investment strategy. One can keep track of all the investment and make a plan for the future as well.
Investing in the market is no joke. The amount being invested in the market is not important; it is the return you generate that matters. A person who had invested in NASDAQ composite at 7000 in March 2020 would have gained double their investment by Nov. 2020.
The market has huge upside potential. With the right stock, one can make the market run in his favor.