Investing is more than just decision-making – it’s a series of small decisions that can make or break your financial status in the long run. This is why having the right mindset can matter more than having all the latest tools and trading strategies.

Still, the mindset cannot be just adopted overnight – it has to be developed. Here are seven tips to help you develop this mindset sooner.  

1. Avoid desperation investing

Resorting to desperation investing is one of the worst things you could do with your money. It’s a state of mind where you feel a sense of urgency to invest before it’s too late. 

It’s a sensation similar to FOMO; however, there’s one big difference. With FOMO, the source of pressure is often external. You’re seeing all these people making money, and you want to do the same before it’s too late. 

With depression investing, it’s even worse (in terms of reasoning). Namely, here, you just need the money (or to get rich), and you believe that the market will abide by your needs and desires. There’s nothing to support this expectation.

The best way to avoid desperation investing is to pick an investment strategy. Every time you feel the temptation to deviate from it, ask yourself if you’re investing out of desperation.

Picking a financial plan and sticking to it is also a great idea. The thing is that all your investments need to lead to a long-term goal. Investing is never a get-rich-quick scheme.

2. Never invest before a research

The next principle you must follow is to never invest before actually doing research. 

First of all, you need to learn as much as you can about the asset type. What’s the difference between stocks that yield dividends and those that don’t? What’s the difference between different stock types?

When it comes to cryptocurrencies it’s even more challenging. Sure, you don’t have to understand the technology underneath or the team behind it in order to invest (or even make money this way) but the more you know, the better your decisions are. 

It’s also important that you make a comparison of assets that you plan to invest in. According to this site, there are quite a few cryptos with the potential to grow in the following period, but you still want to do some reading on each of the coins. 

Keep in mind that you can never know everything and that your time, as an investor, is limited. So, make sure to stay informed but don’t waste your time overanalizing. 

3. Understand psychological phenomena that make you invest

The next thing you need to consider is the importance of phenomena that actually make you invest. This way, you’ll increase your chance of thinking like an investor (as opposed to developing a gambler mentality that some investors fall into).

So far, we’ve already mentioned the fear of missing out, but there are some others that are equally as dangerous.

Some people are so afraid of inflation, which is why they invest in assets that have returns that they believe will grow faster than inflation. By outpacing inflation, they’ll counter its effects, and instead of just preserving their assets, they’ll even go as far as to grow them.

Financial goals are the most common reasons why people invest. Accumulating wealth is a common motivator, but it’s not nearly as powerful as saving money to start your own business, buy a house, or finance a wedding. By understanding what you’re saving toward, you’ll drastically increase the efficiency of your investment. 

This is especially important because of our following point. 

4. Embrace patience

There’s a huge difference between position investing and day trading.

When you’re day trading, you end all your trades between the opening and the closing of the market on the same day. While this method is quick-paced and doesn’t tie down your capital, it has one big flaw – the gains are usually modest (unless you’re taking huge risks).

In fact, you’re supposed to stay profitable with just 30% of successful trades, which is possible if you set up the system so that you lose up to 1-2% and gain between 6-7%.

As for position trading, it’s slower, but it results in smaller gains. The biggest drawback is its lack of liquidity. You need to wait for weeks and months, sometimes even years, for a payoff. If there’s anything else you would rather do with your money, this will limit your possibilities to do so.

If you choose position trading, you need to acknowledge one thing – it will take a lot of patience and restraint. 

5. Embrace modern analytical technology

Modern analytical tools are seriously enhanced with AI technology. Deciding to let a robot manage your investment portfolio is a choice that more and more investors (especially first-time investors) are making. 

These robo-advisors are hardly a new concept, but they’re just now reaching their peak in efficiency.

The most important thing here is that you’re willing to embrace new technology. Sure, it comes with extra costs and effort (that you need to put into research and adjustment period), however, it’s well worth it. 

There’ll always be some new technology that can give you the edge and you can’t afford to be afraid of it. 

6. Diversify your portfolio

The next thing you should focus on is making your portfolio as diverse as possible. If you fail to do so, you’re communicating one thing – overconfidence. When it comes to investing, more often than not, this overconfidence is actually a common recklessness. 

Sure, if you knew which asset would go up in value, the best thing to do would be to put all your money there; however, you never really know this. By diversifying your portfolio, you’re demonstrating that you acknowledge your limited insight into the subject matter. You admit that you don’t know for sure which assets will go up.

This way, you’re also showing the world that you’re ready for any eventuality and that whatever happens with the market, you intend to stick around. 

7. Automate your trading

In order to avoid the temptations of impulse trading, you might want to consider automating your trading efforts. There are a few ways to do so.

First, you can set up stop orders. This is a scenario where you set up your trading platform to buy or sell automatically every time the conditions are met. You can set it up to sell every time the price reaches X and buy every time the price reaches Y. Just keep in mind that these orders are not as efficient when it comes to the broader context, so think it through.

Another thing you need to take into consideration is the concept of copy-trading. Here, you find an experienced trader and set your platform up to copy their trades. Just check beforehand if the platform that you’re trading on supports this feature. 

Investment is a long-term, data-based process, not an impulse trade

At the end of the day, investing is a data-based process. It’s not what you see in the movies, and it’s definitely not some get-rich-quick scheme. While acknowledging this is relatively easy, what’s difficult is abiding by this cognition. This is where the seven tips listed above can prove to be invaluable.