Safe Stock Marketr Investing Involves Removing Emotion

Safe stock market investing requires an ability to remove emotion out of the equation. At least with reference to investments, we'd all be better helped if we could remove emotions from our brain. We cannot so in order to achieve safe investing results it is best to try to take the emotions out of the trade.

So how do we go about removing emotion from investing and learning to controlling our emotions? None of us can completely shut off these emotions. They are a part of our nature. Emotions build our personality. However, you can learn to keep these emotions from adversely impacting your investment strategy. By doing so, you can become a smarter stock market investor and not be continually buffeted by emotional ups and downs. Let's study how two emotions, greed and arrogance, can change our investment trading decisions.

Greed will eventually demonstrates itself and becomes a depleting, moving force. You no longer contain the suitable time to psychoanalyze your decisions. All of a sudden, you feel you're no longer trusting your formulas. All you can think about is stock tips and easy profit — big profits. Anything else isn't gratifying.

Errors in judgment are the result of the momentum of greed. Mistakes will be made. You set yourself up for failure when all you can think about is making an enormously huge fortune. It is likely you are not doing a good job of following your personal investment strategy. Without a disciplined investment strategy, the odds dramatically increase that you will achieve consistent losses instead of consistent profits.

Let's consider what happens when arrogance rears its ugly head. It is a serious matter to be cheerful with your portfolio's results. When happiness turns into arrogance, consistency in making yourself profits become a thing of the past. And it is so simple to let arrogance occur in your investment thinking. When your portfolio has several weeks of strong, consistent profits, you begin to say, "I haven't picked a bad stock yet. I might be a stock picking genius!"

Along the way, you begin to tire of following a disciplined approach to investing. You start causing small errors. Instead of following your rules, you start following your hunches.

Hunch trading is one of the worst ways to trade, but it is one the best ways to lose money. Some of these mistakes may actually make you even more money. (Almost every investor, in a bull market, becomes a stock-picking genius.)

When your arrogance overwhelms your common sense, you begin to set yourself up for potentially significant losses. Why? Because you simply threw away your rules for investing and now rely on your "intuition." Intuition is not a good investment strategy and will eventually lead to disaster. Success can cloud your judgment - don't let it. Stay modest. Make sure to stay smart. Stay disciplined!

If you agree to let a commonsense set of rules govern your trading actions to the extent that you trade only by these rules, then any emotion that might cause you to make poor investment decisions will absolutely be eliminated.

When you investing, you need to do so in a calm, rational state of mind. Try to remove emotion from investing. Stop riding an emotional roller coster and let your investment rules make the decisions for you. Let your rules rule.