How can one stay calm when daily headlines read "High School Student Makes $1 Million Overnight"?
That's why it's so important to have a strategy and stick to it. If your plan is to accumulate positions on pullbacks, you'll buy when prices fall and sentiment is bearish, regardless of how you feel.
If your plan is to take profits when your goals are reached, you'll sell some of your positions on the way up, even if it feels like the rally could continue forever.
It may be ego-satisfying to accurately hit market bottoms and tops, but it's not a reliable way to build long-term wealth. A better approach is to execute your plan over and over again, even if it means missing out on some of your best days.
In investing, a solid and consistent approach often wins the race.
But even the best plans can't completely eliminate the influence of psychology on our trading. We are emotional creatures, and we make mistakes.
The key is to learn from those mistakes, pick ourselves up, and keep going.
Every trader has bad days, bad weeks, and even bad months. Those who achieve long-term success are those who are able to bounce back from the inevitable setbacks and disappointments. They are the ones who can execute their strategies even in the face of adversity, who are able to resist the temptation of FOMO measured in thousands of decibels and the paralyzing control of fear that is more powerful than a professional wrestler.
So, the next time you find yourself feeling extremely pessimistic or irrationally ecstatic, take a step back.
Remember that the herd is usually wrong in extreme cases. Remember your plan, and the effort you put into making it.
Remember that discipline is the key to long-term success, and every setback is an opportunity to learn and improve.
Stay rational in this market, and may you reap the rewards!
Also, remember: be greedy when others are fearful, and be fearful when others are greedy.
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