What you should not be focusing on: (Part 2)
In the previous article, we discuss why focusing on the right objective in trading or investment is so important. If you have yet to read the article, we suggest you go through this link (https://streetquants.com/investing/focus-on-the-right-objective-when-it-comes-to-investment-part-1/) because this article is a continuation of it.
In this article, we will specifically discuss what are the areas you should not be focusing on which most people fall into these traps.
- Finding the best strategy
This is perhaps the most common mistake that traders focus on finding the best strategy. Most traders will always not satisfy the return and continuously aim for a higher return. There is nothing wrong to aim for a higher return, the problem is we should focus on a stable strategy which makes consistent return first because aiming for a higher return. The basic strategy that helps you generating probably 10% per year should not be abandon.
It is often that traders got success in the basic strategy start making the money and change the strategy due to aiming to look for perfection or higher return that cause their trading account starts to lose money or goes burst.
- Prove you can beat the market
Another most common trader’s focus is to prove that he or she can beat the market. We know the great feeling of winning trade especially those trades either hit the home run double or triple your account or you predicted the exact price movement.
It is due to this type of great feeling or emotion causing someone to keep chasing perfection and want to prove that they can beat the market so that they become the top 10% of the profitable trader. In the process of achieving this, they may continue to switch between strategies and looking for another home run.
- Unrealistic return
Do you wish to have a 100% return a month? I guess that is everyone’s wish however we know how difficult it is, and only God knows if that is even possible. Not to mention it is quite impossible if you have $100 billion generating 100% ($100 billion) return monthly due to market liquidity. It will be a kinda great achievement if you can consistently by using a smaller amount to generate a 100% return say $50,000.
For you to consider:
You may be wondering I can achieve all the about and I have seen people do it with the ability to generate the highest return, predict the market movement and the best strategy with the lowest drawdown and etc., why should I limit myself?
Well, if you have obtained all the above just keep doing it, and congratulations! If you are reading our article until this far most likely you are not there yet, then we suggest you drop the above goal and instead focusing on the right area to reach your financial goal.
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