Don’t Think Short Term

It is very difficult to try and determine what company is going to do tomorrow or next week, even next month because you simply can’t account for the human condition. However, you can take a look at the future goals and aspirations of a company to determine where they’ll likely be in the next quarter or two or even the next year.

This is similar to the area of human psychology (the two areas, psychology and trading, are very much related) where psychologists can’t predict what one particular person will do tomorrow or the next day or maybe even next month. What they can do, however, is determine what a large group of people are likely to do in the future. They can also identify and distinguish certain patterns of human activity that are true in the general situation of a large group of people but that don’t necessarily apply to one particular person.

The same thing applies here, you can try to determine what a company is likely to do in the next year or two and then invest accordingly, even if you aren’t sure what they are going to do next week. Because of this there is no reason to be concerned about any small fluctuations in the stock that you are investing in as it is most likely going to even out in the future.

Short Term Stock Trading

Sometimes in trading, some people often experience 20% – 30% pullbacks but it doesn’t bother most of the professional traders since they know that the stock will come back and end up where they think it will in the next year or so.

This is a really important tip and is what separates the professionals from the amateurs because the professionals know to ride out the slight dips along the road while the amateurs get scared and pull out too early losing a ton of money.

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