My 12 Key Learnings as Tradevestor

Advice for Beginners in Stock Market

When I started my active investment journey, I was not sure of many things. I tried almost all the investment options and zeroed-in on stock market. After starting as a value investor, I learnt to apply trading skills to make almost consistent returns even in a sideways to bearish market. I named this approach as ‘Tradevesting: trading with investor’s mindset’. In this article, I am going to share my 12 key learnings as a tradevestor.

Tradevesting in the stock market has taught me several important lessons. Staying peaceful and calm is crucial, even when the market is volatile. Building on discipline, conviction, and patience helps make better decisions. Improving risk management is essential to protect your investments. It’s also important to combine trading with long-term investing. Understanding the difference between stock price and company value, recognizing market cycles and the role of different market players, and accepting the integrated risks and dynamics of the market are all key to becoming a successful tradevestor.

1. Staying Peaceful in Stock Market

To stay calm in the stock market, or in any situation in life, it’s better to focus on the method rather than the outcome. Concentrate on selecting good stocks and following a solid trading strategy instead of worrying about immediate results. By trusting your process and sticking to your plan, you can reduce stress and avoid emotional reactions. This helps you maintain clarity and make better decisions over time, keeping you peaceful even when the market is unpredictable.

2. Building on Discipline, Conviction and Patience:

Building on discipline, conviction, and patience is essential for success in the stock market. Discipline means consistently following your process and sticking to your strategy. Conviction involves having confidence in your holdings and believing in your investment choices. Patience is about waiting for favorable outcomes without getting anxious or making hasty decisions. Together, these qualities help you navigate the ups and downs of the market and achieve long-term success.

3. Improving Risk Management:

Improving risk management in the stock market involves several key practices. First, choose stocks carefully and use a sound trading strategy to minimize risk. Avoid putting too much money into a single stock or industry by staying diversified. Use phased entry and exit strategies, gradually investing or selling to reduce risk. Don’t wait for the perfect moment to buy or sell, as timing the market perfectly is nearly impossible. By following these steps, you can better manage risk and protect your investments.

4. Avoiding Greed, Fear and Leverage

Avoiding greed, fear, and leverage is essential for successful investing. Don’t let greed and fear control your trading and investment decisions. Never use leveraged funds to trade or invest, as this increases your risk. Avoid FOMO (fear of missing out) to prevent making hasty decisions. Finally, don’t use stop loss orders, as market operators can manipulate them. By keeping these points in mind, you can make smarter and safer investment choices.

5. Combining Trading with Investing

Combining long-term investing with short-term trading can offer the best of both worlds. Investing focuses on the fundamentals of a company, looking at its long-term growth prospects. On the other hand, trading uses technical analysis to take advantage of short-term market movements. By balancing these two approaches, you can benefit from the stability and growth potential of long-term investments while also taking advantage of short-term trading opportunities. This combination can help maximize your overall returns.

6. Leveraging Data and Technology

Using data and technology to quantify and automate stock selection and trading strategies can greatly optimize your investment process. By analyzing data, you can make more informed decisions based on solid evidence. Automation can help execute these strategies efficiently, reducing the chances of human error and allowing you to respond quickly to market changes. This approach helps improve the accuracy and effectiveness of your investments.

7. Understanding Stock Price and Value:

Understanding the true value of stocks and how the market views them is crucial for investors. A stock’s price going down doesn’t necessarily mean it’s a bad investment, and a rising price doesn’t guarantee it’s a good one. Even when the overall market looks stable, your portfolio might temporarily drop in value. This is normal if you have chosen your stocks wisely based on solid strategies. Therefore, it’s important to look beyond price movements and focus on the bigger picture when making investment decisions.

8. Avoiding Emotional Trading and Media Influence:

Avoiding emotional trading and media influence is crucial for making smart investment decisions. When people let their feelings like fear or excitement control their trades, they often buy stocks when prices are high and sell when they’re low, which can lead to losses. The media can also affect decisions by creating fear during price drops or overconfidence during price rises. Relying too much on media reports can lead to bad choices and losses over time. To be successful in investing, it’s important to stay calm, think rationally, and not let emotions or media influence your actions.

9. Understanding Market Cycles and Operators:

Understanding market cycles is about knowing that the stock market goes through different phases: prices can fall, stabilize, rise, or peak. Recognizing these cycles can help you decide when to buy or sell stocks. It’s also important to learn from investors who have been successful in the past. By studying their strategies and decisions, you can gain valuable insights to improve your own investment choices. So, knowing market cycles and learning from successful investors are both helpful for anyone who wants to do well in the stock market.

10. Recognizing Advisors and Developing Skills:

It’s important to listen to investment advisors and consider their advice when making decisions. They have the knowledge and experience to help you make better choices. At the same time, it’s crucial to develop your own skills for success in the stock market. One key thing to learn is that a stock’s price doesn’t always reflect its true value. Focus on understanding the basics, like the difference between a stock’s price and the actual value of the company. Combine this knowledge with technical analysis to become a more confident investor. Spend time learning about the stock market instead of just focusing on entertainment. This will help you make better decisions.

11. Accepting Integrated Risks and Market Dynamics:

Diversification is important for managing risks in the stock market. By spreading your investments across different assets, you can reduce the impact of fraud and market changes on your overall portfolio. It’s also important to understand market dynamics and be ready for both good and bad times. Economic conditions affect how stocks perform, so staying informed and being adaptable is crucial for success. By understanding these dynamics and diversifying your investments, you can better protect your portfolio and navigate changing market conditions.

12. Having Survival and Growth Mindset:

In investing, having a survival and growth mindset is key. This means focusing not just on making money, but also on avoiding big losses. Stay invested for the long term to give yourself the best chance for success. Instead of trying to make quick gains, think about how you can protect and grow your investments over time. It’s about playing the long game and being patient, even when things get tough. With this mindset, you can handle the ups and downs of the market and come out ahead in the end.

In summary, the stock market has taught me valuable lessons. Staying peaceful and calm, building discipline, conviction, and patience, and improving risk management are all crucial for success. Combining trading with long-term investing, understanding the difference between stock price and company value, and recognizing market cycles and players help make informed decisions. Accepting the risks and dynamics of the market is essential. By applying these key learnings, we can navigate the stock market more effectively and work towards achieving our financial goals.

If you loved this story, please feel free to check my other articles on this topic here: https://ankit-rathi.github.io/tradevesting/

Ankit Rathi is a data techie and weekend tradevestor. His interest lies primarily in building end-to-end data applications/products and making money in stock market using Tradevesting methodology.