Avoid Emotions, Secrets of Investing

Few days back I had a discussion with one of my old friend. My friend is having very good experience in financial markets. He told his investment experience with me. He gained many experience in financial markets by loosing few lakhs of rupees. We need to learn many points in his experience. I am providing his words here below.

One of my friend told, we can earn huge income in share market. He ask me to invest in share market. I was thrilled his words. At that time I had 2 lakhs rupees in my bank account. I divided that amount and invested eight different stock as per his recommendation. I got gain of Rs.5000 in 3 days. In few more days my capital is yielded me another Rs.10000 gain. After month my total value in my account has increased to two lakhs and fifty thousand. I was very much enjoyed my situation. I told all this investment experience to my wife. She also thrilled and she took another one lakh rupees from his father. I invested that amount also in the share market.

In next week my capital never given any profits nor loss. Few weeks back share market corrected sharply. My investment value went down to one lakh rupees. I was in more panic as my investment in going down to negative zone from fifty thousand profit. My friend to told, Don’t worry you investment will raise soon.  But after that my investment was came down to one lakh fifty thousand slowly. Finally I last my hope in market and sold all my shares and re-paid the loan I took from my father-in-law. But after that all my invested shares are raised above my buying price.

Okay now check the image above. You can see all emotions which my friend experienced. Even if you are more brilliant, it is difficult to get rid of human emotions. So we should not take decision on the basis of emotions. If we follow some following factors our investment experience will always be good.

Investment factors to learn without Emotions.

1. If we like to see an movie. What we will do? We will check all reviews before going to that movie.  But in investment factors we are not concentrate about reviews. We are not reading or analyzing share reviews before investing. Share investment is not a time passing work. We need to learn what we are doing. Without analyzing we should involve in any investments.
2. When the market fluctuation we should focus on our emotions. We should not follow our emotions. Those who are not following their emotions they will make profit in financial markets.
3. Timing is more important. Even if it is the good profit making company share, we should buy in right time. We have to control our emotion and wait until the share is reaching our expected price.
4. We should not invest all our capital in  same time. We have to divide our capital 8 to 10 times and invest periodically when the price coming down. Before investing we have to analyse about that company.
5. We should not take a loan for share market investment. Most of the time this strategy will give negative result.
6. Without losses investing in share market is not possible. Even very good analysed stock will give losses. We have to take it as experience. We should be panic in the loss.

So we should not take decision on emotions. Correct research and analysis will make you good investor and it will yields you in good profit.