I know when I first started on the road to financial education I barely finished the first book and wanted to plunge headfirst into share trading. Luckily I withheld long enough to get a good understanding of the risk and patience needed to wait out an investment if things turn unexpectedly in the wrong direction. It’s one thing to do practice trades (Paper trading) and watch your investment take a dive, there’s nothing really lost is there? It’s another to use actual real money and watch the same thing.
Before I created my current share trading plan I was a real Warren Buffet fan and studied companies and speculated their rise in market status etc. I remember my first ever trade that just kept falling and falling and falling. At first I told myself that it will come back any day now as I watched with anticipation over the following weeks that slowly led to doubt. I started to doubt myself and poured over the information once, twice and a third time looking for something that I missed. The worse thing I did was calculate how much real money I was losing and questioned whether I started investing too soon and should have educated myself more. It took about six months to recover and make my profit margin and I learned a very good lesson in patience.
You see, as I tell people: If you buy ex amount of shares you still own ex amount of shares no matter what the market does. It’s sometimes hard to grasp that when your stocks value is tanking south. I have heard the stories, especially during an event that affects the share market, when people panic and sell their shares because they see the market crashing. They justify it by believing they are salvaging what’s left of their investment when really they have reached their limit of patience and risk. I’ll bet those same people watch the market crash further in the relief that they sold only to watch the price rise beyond their original buy price. It’s heart breaking.
The experts will tell you that they love a good crash. That’s where they get their bargain basement shares from. Let’s go back to 1999. What if you invested in some simple bank and mining shares and never looked at them again until now. You would have missed the scary ride of the Dot Com crash and Global Crisis and reveled in the 2016 profit margin most companies are reporting today.
I will always advise a beginner to share trading to take their time and learn, but at the same time paper trade to test their theory. If mistakes are made then rule a line and start again. There is no exact science to share trading but there are many people who make a fine salary from it. One of their secrets is PATIENCE.