Weekly Lesson Wednesday📝

Make a fucking plan.

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One of the most important factors in investing - Have a fucking plan.

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Having a plan is debatably the most important factor in trading/investing. If you are going to blindly invest and throw money around your gonna end up getting burned. Whether if it’s now, 10 years, 2 years, or next month, it’s all going to go to zero if you walk in like nutless monkey, you may have a few wins but hey, even a broken clock is right twice a day.

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So to avoid that you must create a system/plan for everything you do. Create a plan, test it, re-test it, stick to it, and never veer off the tracks. That is how you create long-term wealth.

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So how can you create a plan?
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Well in my experience which is relatively new and potentially even fucking irrelevant to some of you, but here is my take.

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3 Steps to a good plan.

- Emotions

- Thesis

- Entry and exit

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Phase 1: Emotions.

If you trade like a 16-year-old girl on her period, your gonna get fucking wrecked mate. Trading is not for the faint of heart. You have to be emotionless, numb, confident, and resilient.

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The market is a game of mental strength, believe it or not. You must learn discipline. For example, when you buy a stock, and it goes up, human nature tells you, “Wow, I made so much money, I should hold this stock for longer and keep making money”. Human nature is made of greed; you always want more, you will never be satisfied & ultimately hold until you lose it all if that is your mindset.

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That type of thinking will lead to losses. You must learn to lock in profits and think rationally.

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It also works vice versa; your brain always tells you to sell when you are at a loss “I am losing money, I want it to stop“ therefore, you sell.

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This gets us in trouble. Emotions get in the way. What you should be thinking is why you bought the stock in the first place, you should be happy it is cheaper and buy more at a cheaper price.

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You will take losses, losses are good, and they teach you. But the weak quit when they lose, and the strong get motivated. Learn to harness losses with a rational mind.

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Investing isn’t a straight line to the top, it consists of highs and lows, the lows feel like a lifetime, just know it will be over one day, so don’t get discouraged because you lost. 90% of regular normies quit investing when they lose, that is a way to guarantee you will never be a winner. Winners learn and push through. For every it’s so over moment, there is a were so back moment around the corner. Don’t let your mind get the best of you.

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Another emotional factor that plays in is FOMO ( fear of missing out ). When an individual sees a stock is rising significantly, they feel like they have missed out and do one of two things, they buy that inflated stock at a higher price than it is worth, hoping to be part of the fun, and then lose money as it goes back to its proper value. Or they feel agitated that they missed out on that stock and go impulsively buy another stock without having any research done or a plan in place.

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Keep your mind clear. Stick to your plan. Never break it. The brain plays tricks on you; it tells you to hold your stock when you are making money & then sell it when you are losing money; it tells you to buy a stock that has already risen in price instead of a stock that has declined and has a more favorable value. Never let your emotions get in the way. Think rationally.

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Phase 2: Make a thesis/story.
Before you ever buy a stock, you must create a thesis and a story...

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Rather than just aimlessly buying a stock because it is up 500% this week or because someone says so online. You must create your own thesis and a little story on what compelled you to look at this stock, why do you like this stock? why are you buying it? what do you think the stock will do? and why?

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Most importantly, it must come from you, unbiased, from your heart.

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Here are some things to consider when making your thesis or creating your story behind a trade or investment:

Trusting your gut: Trusting your gut means relying on your intuition or instincts when making investment decisions. It's about listening to your inner voice and considering your personal beliefs and experiences, not the words and influence of others.

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Creating a thesis: A thesis is like a logical argument that supports your investment decision. It's a clear reason why you believe a specific investment will make money. Trusting your gut can be part of this process, as your intuition can guide you toward opportunities or insights.

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EX.) Inflation is on the rise, and historically, when the value of the dollar decreases, gold prices rise. I believe that $GOLD is the best exposure to the gold market. For the following reasons: They historically have outperformed the market in inflationary times, they have consistent growth, an experienced management team, and $GOLD has a discounted share price to its peers who have very similar financials and core business structure. Therefore I think $GOLD is my best option for investing in the Gold sector to beat inflation. I think gold is fairly valued at the price it is at right now, and I feel confident in my decision to purchase shares here.

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Phase 3: Create an Entry and Exit

The only way you will ever profit in trading is if you enter every stock with a predetermined entry and exit price.

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Always have an entry and exit price within your research. Before you purchase 1 share of a company, you must have a pre-determined buy price for your stock and a predetermined sell price in mind.

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If you don't otherwise, you will be caught guessing and will let emotions take over instead of the plan.

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Say your buy price is $.10 & the stock finally reaches it. Before you buy that stock, you should have created a selling price (a price you are comfortable & happy with selling your shares for). When that stock hits your sell price, you should be ready to sell, regardless of how happy you are with your gains.

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At this phase, you will start to hear voices in your head (keep holding, it's going to go higher). But remember your original strategy and stick to it. The only reason you should change your original plan is if the fundamentals of the business change. Example. Say it's a Gold Company & as you were holding the stock, the company bought a new gold mine & then the share price rose to your desired sell price. Well, now you can re-evaluate your decision. Since the new purchase of the gold mine added value to the company, your original judgment may be wrong, and their value may exceed what you originally thought.

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Personally, I always take profits and sell at my target; you will never be upset with making money.

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But in some scenarios, when the business change is significant enough, you can set a new/higher sell price and keep holding in hopes of achieving more profit.

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Another factor that could influence your sell price is that the business has changed for the worse. Maybe the price of gold crashed, or their gold mine got taken over by hippies. Now the value of your business has changed, and you have to evaluate if you think the stock is still worth what it once was. It may have a fraction of the value now.

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Another factor may be your tolerance for loss. It's okay to have a low tolerance for loss. Maybe you are only comfortable with losing 10% of your money. So sell the stock as soon as it declines past the % of loss that you predetermined. I don't use this much; I generally only sell my stock when a.) it's at my predetermined sell price. b.) the fundamentals have changed for the worse

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Conclusion:

If you read this, hats off to you. I worked hard at it, and I think these aspects of investing are more important than any fucking balance sheet or chart.

However, a lot of what I talked about above is hard to learn from reading, you may have to experience it firsthand; like I did through many losses, almost quitting the game, mental breakdowns, stupid trades, and missed opportunities.

Well cheers to that, I hope I impacted your investing game through this write. New, experienced, retarded, or smart you need to know these principles.

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