≡ Menu

Learn To Avoid Emotional Investing And Trading

Open ZERO Brokerage FREE Share Trading Account - Buy and Sell Stocks Without Brokerage - Set GTT (Good Till Triggered) Orders on System and Forget

Traditional brokers charge a lot for brokerage; however, this broker does not charge anything for stock buying and selling. Also, you can set GTT (Good Till Triggered) order after buying a stock, so that the system can sell the stock automatically at your target price even if you are not monitoring the market. Only 25k is blocked for option selling with hedge. Also, you get a lifetime free account in Sensibull (virtual trading app & strategy builder) which charges Rs.800/-+GST a month. Learn option hedging strategy if you open an account today. It takes 5 minutes to open an account online. Click here and Open Free Account with Them Today >>

In the article why emotional investing and trading must be avoided we discussed why emotional trading is bad for traders and must be avoided.

This article helps to understand how to avoid emotional investing and trading in stock markets. Advice in this article will help you to understand how to keep emotional trading and investing under check and control.

Bad Financial Portfolio Risk Management

Most stock traders get into stock investing and trading more for the “greed part” and “make money fast part”, and in haste forget their finances and investment capacity. A lot of them take a personal loan for no reason except to trade the stock markets. This is a huge mistake.

You can read how I manage my finances using the 25-25-25-25 Financial Portfolio Risk Management Rule, and do not let the rules of my financial management break at any cost even if I am absolutely sure a particular stock will make a return of 20% in one year.

In Short My Financial Portfolio Risk Management Rules Are:

  • 25% of what I save are invested in fixed return instruments guaranteed by Government of India like Bank Fixed Deposits, PPF, NSC etc.
  • 25% of what I save are invested in top rated diversified equity mutual funds via monthly SIPs (Systematic Investments Plan).
  • 25% of what I save are invested in good large and mid-cap stocks for the long term – 10 years or more via the monthly SIPs (Systematic Investments Plan).
  • 25% of what I save are invested in my derivatives trading account.

Sometimes the stock which I wanted to invest in but could not because I am not willing to break my financial portfolio risk management rules, makes more than what I expected, but I still do not regret my decision. The reason is pretty simple, one bad greedy investment may take my financial returns back by two years. This I want to avoid at any cost. By keeping my financial management rules in check I can sleep peacefully, knowing very well even if one part does not perform well, the other parts will do and my total finances will grow positively at the end of financial year.

Assuming I let greed take over and break my fixed deposits and invest in a stock for one year and after one year I see that the stock is down by 20%, I will rue my decision. Instead if making 8% returns by fixed deposits in that money, I would have lost 20%. Taking the fixed deposit returns into account my total loss will be 28%. To avoid these kinds of mistakes I never break rules of my finance management.

The story can be different too. Assuming I break my fixed deposit and invest in a stock. After one year the stock gives a return of 25%. I get greedy and break another rule of finance management. I break another part and invest all the money in another stock and boom after one year that stock is down by 30%. Overall after 2 years the investments that could have made around 10% are still down by 5%.

Hope now it is clear why proper risk money management is very important before keeping money for trading or investing.

NOTE: It is not mandatory to follow my risk management procedures because your income and needs my differ from mine. Therefore think hard and plan your risk management before you start investing. You can change your risk management plan anytime you want but it should be logical not emotional. If you need my help to make your financial risk management portfolio rules you can contact me.

TheOptionCourse.com © Copyright Since 2013 ® All Rights Reserved

Click to Share this website with your friends on WhatsApp

COPYRIGHT INFRINGEMENT: Any act of copying, reproducing or distributing any content in the site or newsletters, whether wholly or in part, for any purpose without my permission is strictly prohibited and shall be deemed to be copyright infringement.

INCOME DISCLAIMER: Any references in this site of income made by the traders are given to me by them either through Email or WhatsApp as a Thank You message. However, every trade depends on the trader and his level of risk-taking capability, knowledge and experience. Moreover, stock market investments and trading are subject to market risks. Therefore there is no guarantee that everyone will achieve the same or similar results. My aim is to make you a better & disciplined trader with the stock trading and investing education and strategies you get from this website.

DISCLAIMER: I am NOT an Investment Adviser (IA). I am an Authorized Person (AP) of a Stock Broker. I do not give tips or advisory services by SMS, Email, WhatsApp or any other forms of social media. I strictly adhere to the laws of my country. I only offer education for free on finance, risk management & investments in stock markets through the articles on this website. You must consult an authorized Investment Adviser (IA) or do thorough research before investing in any stock or derivative using any strategy given on this website. I am not responsible for any investment decision you take after reading an article on this website. Click here to read the disclaimer in full.

Disclaimer | Privacy Policy | About Me | Conservative Option Course | Bank Nifty Weekly Options Strategy
Find 200+ testimonials of my course on these pages too posted year-wise:
What Traders Say About This Course
Testimonials Year 2015
Testimonials Year 2015 Page 2
Testimonials Year 2015 & 2016
Testimonials Year 2016
Testimonials Year 2017
Testimonials Year 2018
Testimonials Year 2019
Testimonials Year 2020
Testimonials Year 2021
Testimonials Year 2022
Testimonials Year 2023
Testimonial of one of my client making 25k per week
Emotional Testimonial by a Young Woman Trader and Her Mother
Difference Between other Courses and Mine
What others charge for online courses
What People Say Just After Doing My Course
Bank Nifty Course Testimonials

My student gets the Winner's Certificate of Zerodha 60-day Challenge - Click here and Open Stock Buy and Sell Free Account with Them Today!!!

Traditional brokers charge a lot on brokerage, however this broker does not charge anything for stock buying and selling. Also, you can set a Good Till Cancelled order after buying stock so that the system can sell the stock automatically at your desired price even if you are not monitoring the market. Plus only 25k is blocked for option selling. It takes 5 minutes to open an account online. Click here and Open Stock Buy & Sell Free Account with Them Today >>

About the author: Dilip Shaw I started trading stock markets since 2007. However my first 3 years were losses. Then I dedicated almost 1 year on studying, researching, paper trading options and learned a lot in that time. Since 2011 I am trading Nifty options profitably. Call me if you need any help trading options on 9051143004.

{ 0 comments… add one }

Leave a Comment