TIPS TO MAKE MONEY IN THE CAPITAL MARKET
A lot of traders and investors who are still beginners have expectations in trading can multiply capital and earn extraordinary profits in a short time.
But the fact that often happens is the opposite instead of doubling the capital even the losses experienced by traders or beginner investors.
Then why are traders, especially traders who are beginners more often suffer losses than luck?
This is inseparable from the stock they have is still very minimal in the world of the stock market and plus there are no mentors or someone who is more experienced in accompanying them, so it is more often a loss than luck.
There are also some other things that are not less important that traders need to know if you want to make money in the stock market, then what you need to know so you can make money in the stock market?
Avoid "Averaging Down"
Have you ever bought a stock and then the price drops below your purchase price, then you make a buyback below with the assumption the price is cheap? If ever, then you have done averaging down.
What is averaging down? Averaging down is buying back a stock after the price drops from the buy level or the previous capital.
Suppose you buy 1 lot of BBRI shares at a price of 4000, then BBRI's stock price drops to level 3000. If you buy 1 lot of BBRI shares at a price of 3000, then your average purchase price will drop from 4000 to 3500. This strategy is called a strategy averaging down.
Most beginner traders will do averaging down strategy, but not necessarily the price will rise again after you do averaging down. What if the price goes down further? Of course the losses that you will experience will be even greater.
You need to know that, when prices move against your results, falling below your purchase price, you might make a mistake in your analysis, or you might miss something so that prices reverse in the opposite direction of your analysis.
Therefore it will be very dangerous if you do averaging down if the price continues to fall and you do not know when the stock price stopped going down.
Discipline and Never Fear Cut Loss
Investors and traders should also know when to sell their shares when prices fall below their buying or capital prices. Most investors and traders instead of limiting losses when prices fall below the purchase price, they instead buy back the shares by averaging down .
They hope that if the stock price will continue to rise again and not infrequently these expectations do not occur, instead the stock price drops sharply.
This assumption is wrong. Because with this condition you are overwhelmed by your own emotions and ego, so the rules that should be set at the beginning and the level of stop loss you've set become meaningless and defeated by your own emotions and ego.
It is very dangerous, why this can be dangerous?
This is very dangerous because the losses or risks that you should be able to limit, even become bigger and eat your capital.
Start Small
The last thing that is not less important and often overlooked by many traders is the trading portion of your capital. How much funds do you need to trade from your capital? Is it 10 to 20 percent of the capital? Or even 50 to 80 percent of capital?
When you first enter the market or take a position in the market, from the total capital you start with a small fund first can be 10 percent of capital or 20 percent of capital. And do not add your trading portion once, unless you can consistently generate profits with your trading.
The philosophy in understanding this is actually very simple, if you can't make consistent profits using 10 to 20 percent of your capital, then why do you have to increase your trading portion to 50 to 75 percent of your capital? Vice versa.
By using a small trading portion of your capital, if in case the price reverses direction is not in line with your analysis, then you will lose a little money from your capital. Vice versa.
By implementing this method means you can control the risks that you will face. So that you will trade safer with risk in the future.
"Small success leads to big success"
Many people who are just starting to want to get involved in trading do not even understand how to properly control risk. They have no good planning to protect their capital. As a result, it is not the profit that is gained but the loss that makes them frustrated. They try and try again without success, rather than succeed, instead they lose time, loss of money, and mental loss.
Instead of wasting your time for trial and error, shorten your time by studying with a mentor. You need a mentor who is able to show you the way. Who guides you and teaches you step by step to become a successful trader.
