New Guy - with an old question

Mx_Trader

Recruit
Messages
2
Hi,

I am new to this forum, and have a question that I was always curious about. It has more to do with stocks than FX.

The markets always go up over the time, that's a rule of thumb. Most day traders are losing. Why not just buy blue chips, add and then add more (over the years) and then just realize gradually?
 

Pharaoh

Colonel
Messages
19,783
Some short term traders can make profits, but most don't. A lot of people want to trade frequently so they can feel like they are in control.

What you are talking about is long term investing. If you pick a good group of stocks or index funds, keep buying in (especially on dips) and don't freak out as the price rises and falls, this wont guarantee profits, but the odds of ending in profit in the long term are much greater than that of the average short term trader in forex or stocks.

Do remember, some of those gains will be eaten by inflation, but if you pick solid stocks that have good long term potential, a well designed long term investment plan has a good chance of making you very happy over a 10+ year period.

In my personal opinion, the current virus issue, combined with trillions in (borrowed!) bailout money (not just the US, but other countries too) has us on the edge of a global recession. If I'm correct, you can buy some stocks now, but should primarily be building up some cash savings (keep the cash in Mattress Bank - protecting your assets since 1929) so that you can buy more shares with less money if/when the market moves downward.
 

bigdolly

Sergeant Major
Messages
961
Hi,

I am new to this forum, and have a question that I was always curious about. It has more to do with stocks than FX.

The markets always go up over the time, that's a rule of thumb. Most day traders are losing. Why not just buy blue chips, add and then add more (over the years) and then just realize gradually?
The issue is with our psychology. When you see SPX near historical peaks you think it is overvalued and want it to go down a little bit to enter long. But when it starts to decline the feeling grows that it may go lower and you will get better entry point OR it could be a start of a bear market and it is not a good time to buy. When it goes even lower you start to fear that it may go lower further, etc. As you can see it is an emotional trap - as your knowledge about the state of the market updates your emotions also change, changing your opinion about correctness of your previous assumptions.

As you see our emotions make us lagging behind the market because we need some time to calm down our emotions and get confirmation from the market that everything is ok. But at the time you get confirmation it can be late.
 
Top