The past week has provided a good lesson for many. China was falling.
The end of last week was marked by the fall of China. In practice, the entire Chinese stock market fell, but this happened, of course, under the influence of the commercial education sector. And the whole industry of the educational sector did not just fall, but collapsed. TAL shares plunged by, cosmic, 70%. GAOTU TECHEDU shares up 63%. Just think about it if you were out of paper! And if they were in papers …
This is an example of the risks that take place with this country, work in the stock market in general. China once again reminded many people, and taught someone cruelly, that the stock market is not a toy. Working in the stock market is associated with the risk of complete loss of capital. From this you need to proceed in your approach to working on it.
When we were taught to drop (packing parachutes) at the department, we had the strictest rules for packing parachutes and rules for behaving ourselves in the air, which for some reason was out of the question. The authority of these rules was written in lives. In the stock market, we have a place only with finances, life directly from the fall of the stock market does not stop. But history has an incredible number of examples of traders who have failed to cope with the psychological stress caused by the loss of capital.
Therefore, when working in the stock market, there are also rules, which are probably written not even by billions and trillions of dollars in losses of traders and investors, their careers and sometimes even the lives of those who did not cope with the emerging force majeure circumstances.
A good indicator of your correct behavior in the market is your calmness under any circumstances. I am not talking about whether there are losses or not. I’m talking about psychological calmness. If you are calm and this is not an imaginary calmness imposed by someone else’s idea, then you are behaving in the market, rather, correctly. But there are factors that support this calmness:
- Your idea;
- Portfolio diversification;
- Risk assessment;
- Checklist before making transactions. This point, correctly and honestly done by you, simply will not allow you to enter an unconscious transaction.
The task when working in the market is not even to turn off emotions. The ostrich also turns off emotions when it hides its head in the sand. It is necessary to do those actions that will turn them off (these emotions). If you expect it to be simple, you are mistaken, and the market will correct this fallacy. Therefore, “studies, studies and studies!” as the Great Lenin bequeathed.
With you was Alexander Perfilov, the author of the telegram channel “Look at the Market” @perfilov_invest