3 key reasons why people ‘fail’ in the markets.

3 key reasons why people ‘fail’ in the markets.

No set plan…This is the number one reason for failure.

If you don’t have a clear plan of action for each set of market circumstances, then the markets will be one huge roller coaster ride.
This uncertainty can be overcome by knowing in advance:
* how much to buy;
* what price to buy at;
* when to sell; and
* how much of your total capital to risk.

All of these elements are covered in our strategy sections before we recommend any one stock. Consider this: You have risk capital of a total $50,000 to invest.
If you risked 2% of your risk capital ($1,000 from $50,000) on one particular stock and the stock fell 50%, the maximum you can lose is $1000.
Compare that to risking 100% of your risk capital (the whole $50,000) on one stock and the stock went down 50%, which means you can lose up to $25,000.
If you knew that your worst case scenario was that you were going to lose $1000, you would probably sleep better at night, and worry less about market volatility.

Negative beliefs about money

This mindset can take a bit of effort to change, but clearly, you should not be investing with money you can not afford to lose. Scared money never wins and will impact your decisions negatively. There are number of techniques that we will show you in future articles to help you address these issues and change behaviours.

No cash reserves to take advantage of opportunities

The reality is this, that unless you have a certain amount of cash at the ready, it will be impossible to take advantage of investment opportunities.
Most fund managers sit on at least 5% to 10% of cash at all times (depending on the market), and there is no reason why individuals should be any different.

Note: adapted from investment wise