How do you learn to accept short-term losses in the stock market?
There’s a short and long answer to this question.
The short one is:
Use an objective Decision Support System (DSS) with a researched and verified Edge.
The long answer goes more into what you accomplish by doing so and what behaviour you must eliminate in the process:
First, using an objective DSS and following its pre-defined timing criteria to the letter helps you build a mindset of consistency. And this is the key ingredient not just for becoming a consistently profitable investor…
But also for ensuring your emotional well-being remains intact while gunning for your profit goal.
There might be another equally good or better ways to build a mindset of consistency. I don’t know of it, but if you find one — by all means use it.
What’s crucial is you start creating such a mindset, in any way you think is best.
Just going through this process empowers you to overcome “noise,” your emotions, your “societal paradigm,” and cognitive biases. (If you read my previous article, you know these are among the 4 major and most common roadblocks to becoming a successful investor.)
It helps you get a grip of the bull markets and ride them to more profits even as most renowned analysts and gurus continually call the top of the market.
It helps you keep on trucking along and executing your system when volatility, crashes, and other market turmoil prevail.
Yes, you might still feel uncertainty’s attempts to draw you into a state of panic and make impulsive investment decisions. But when you build a mindset of consistency, you learn how to control these emotions.
Which brings us to the behaviour you must eliminate to boost your chances of achieving long-term profitability in the stock market:
Stop being an inconsistent on-the-fly researcher and analyst.
This means refraining from listening to and reading compellingly crafted stories and tips, brokers’ reports, individual stock market predictions and opinions, etc.
Instead, you should work on transforming yourself into a calm, consistent, and confident investor. Only then can you hope to reach long-term profit levels that will radically change your life and the lives of your loved ones.
This is where the short answer to today’s headline helps. In my experience, executing buys and sells with precision, according to criteria and rules that are thoroughly researched and back-tested to verify the existence of an Edge BEFORE starting a portfolio…
Is the best way to skyrocket your chances of consistently outperforming the market.
On the other hand, succumbing to on-the-run ideas and stories while managing your portfolio is a surefire way to lose both your money and nerve.
A consistently confident investor believes all it takes for long-term success is to execute what they know without second-guessing themselves or their Edge. And then simply allowing said Edge to play out as it is intended. (Unsure of what an Edge is? Read this.)
Becoming a consistently confident investor boils down to internalizing the following truth:
Once you know what to do, you must simply do what you know.
But knowing what to do is far easier than doing what you know.
That’s because knowing what to do only requires knowledge. And doing what you know, especially under pressure, which is inherent in the stock market, requires specific mental skills.
That’s why so many people figure out their “what,” only to never execute it because they don’t believe it’s good enough. Thereby wasting huge amounts of time searching for perfection and trying to completely eradicate loss and the pain that comes with it.
But doing that is impossible. The gist lies in seeing short-term losses as a standard part of the investing game. Until you accept this fact and start thinking in terms of probabilities instead of certainties…
Consistent profitability will continue to elude you.
But once you accept the probabilistic environment of the stock market and get a Statistical Edge that puts said probability on your side…
You’ll build confidence in both your “what” and the action needed to achieve it.
Add such consistent confidence to your knowledge, and you’ll finally begin doing what you know. Thereby charting a course to consistent, long-term profitability in the stock market.
Not just despite short-term losses, but also because of them.
You see, when you have a market-beating mindset and system — losses become omens of future success.
Sounds too simple and good to be true, I know. But my (and the experience of 1000s of investors my team and I have mentored) confirms it is. And if you want help getting there without risking anything in the process…
Send me an email with your current investing situation, and let’s chat.
To your success.