Be A Smart Trader – Ignore the Prediction Crowd

We get a lot of questions about the economy, investing, and personal finance. Most of the questions that we get can be answered in a few short sentences, but some questions take a little more thinking. This is a time of the year where everyone puts out predictions about what will happen in the upcoming year.

However, there’s something important that you need to realize; the predictions shouldn’t matter. Treat them as entertainment. Market predictions are just speculation, but it’s not based on anything solid. You just need to go back to solid investing principles.

First and foremost, do you understand the history of what you’re dealing with? Securities are such that you either know what’s going on with the market, or you really don’t. Trying to just guess is like betting from the gut at a casino while you’re playing poker. Sure, you might get some lucky breaks but there’s going to be a point where you fail miserably. Why? It’s easy — you just don’t have anything else going on in your life. You would love to be able to go out on your own and really do something incredible, but you find yourself falling short of that. As a trader, you might even feel like you’re being judged against what all of the other traders are doing. That’s not a world that you want to occupy if you can help it. It’s better to truly look at everything you want to do as an investor, and then go from there.

Smart Trader
For example, some people start promoting automated software this time of year, because they know that investors are thinking about what they want to do with the future. The reality here is that no automated software can replace the power of the human mind. So if you’re looking for push button profits, you really won’t find them. However, if you go back to the principles of technical analysis, of fundamental analysis, and of sentimental considerations as far as the investor mind in general, you will go a lot farther.

We’re trained and literally hard wired to deal with patterns, but that doesn’t mean that we have to give in. We can be stronger than the patterns that we live under.

There’s nothing wrong with thinking about the road ahead, but make sure that you’re being smart. Have you looked over your portfolio? Can you join an investing group that meets regularly to discuss this type of thing? Where do you really want to be a year from now as an investor? As long as you’re considering all of these issues ahead of time, you should be just fine.

Get in the game, review the numbers carefully, and then go from there!