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6 factors to consider when planning your stocks trading.

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Do your own due diligence.

When investing you should do your own due diligence, research deeply the stocks and companies that you are interested in. You can check others’s research and opinions but your decisions should be based mainly on your own research. You could reinforce your process with the use of tools to collect and process your data.

Have a record of your criterias and hipotesis by what you selected your stocks. They will serve you to assess the stock and decide when to exit. When they are not true any more is a good indicator that you should reevaluate your decisions and consider getting out.

If you feel that you are not up to the task, have time constraints, etc, consider investing in securities that are less demanding like indexes or hire a professional.

Don’t make investment decisions based on emotions.

The way our brain is wired has evolved to make us react in two ways. One way is dictated by the reactionary brain, in situations that are type fly or die, where we react by default, by impulse, by emotions, without a deliberate rational thinking.

When you are up to a financial decision, cool down, use your other way, the rational part of your brain, the slow thinking. Step down, analyze your situation, reevaluate your information, filter out your emotions and biases.

Address your bias before making decisions that would affect your positions.

We all have biases. Liking or disliking a company or stock based on opinions of influencers about certain companies could impact our decision making.

Being aware of our biases will not make them disappear or make us better decision makers at the moment of the decision but could serve us as input to create a system of rules and methods. A model that will make us operate as slow thinking in a moment of fast decision taking and then being less prone to the bias traps.

Be aware of the noise in your trading life.

It is known that the weather, time of the day, type of music background, and the quality of sleep the night before among other factors have an effect on our decision making. So be aware of the situation that you are in before making a decision of big consequences.

Don’t let others decide for you when trading.

If you are in the business of buying and selling stock you should take complete responsibility for when to get in and when to get out of a trade. You should not act by chance or be influenced by others' opinions, news, emotions or other external factors that you have not validated based on your own research, status, risk tolerance and goals.

So set a system or rules in what your decisions are based. Use it, re-evaluate it and update it according to your findings.

Have a risk management strategy and contingency plans for your investing.

We all have different risk tolerance and different risk space to react. So in accordance, have your own contingency plans. That a stock goes down doesn't mean that you have to automatically panic sell. Take some time to re-evaluate, check your indicators, betas, price movement, average down opportunities, impact on your overall portfolio and investment goals, etc.

The idea is to get insight on how the fundamentals about the stock have changed and how they diverge with your expected growth trajectory and value expectations. Based on that, decide to sell, buy or just do nothing.

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