Some people think you have to be especially talented with numbers to become a successful investor. That isn’t always the case. Investing is about more than crunching numbers. In fact, when it comes to successful investing, you might be surprised to learn that the most important first step has nothing to do with understanding numbers. It’s more about your mindset.
The book Mindset: The New Psychology of Success by Stanford University psychologist Carol Dweck shares a possible secret to becoming a successful investor. Dweck emphasizes the centrality of having the right mindset when trying to master new skills. People often have either a fixed mindset or a growth mindset, which has a profound impact on how they approach problems.
Those with fixed mindsets believe “they have only a certain amount of intelligence, a certain personality, and a certain moral character,” according to Dweck. In a way, these individuals believe that nature has predetermined those attributes. Those with growth mindsets believe “that basic qualities are things [they] can cultivate through [their] own efforts.” In other words, those individuals who have a growth mindset believe the power of nurturing can supersede nature’s influence. Needless to say, beginners at anything ought to rely on a growth mindset if they plan to make meaningful progress.
Expectations have to be managed appropriately too. Far too many newcomers arrive with unrealistic assumptions and false hopes. Investopedia openly debunks the five biggest stock market myths, beginning by stressing the clear distinction between gambling and investing, and then proceeding to remind readers that the stock market isn’t reserved exclusively for the rich and powerful. Amateurs shouldn’t be discouraged from investing in “fallen angels” and should avoid applying the laws of physics to the stock market.
The next step is learning as much as possible about trading and the stock market. Curious souls who want to explore have absolutely no shortage of resources available, and you don’t have to look far to find an introduction to the stock market in layman’s terms. Readers can expect relevant definitions and illustrative examples that make it fairly straightforward to grasp the basics.
The soundest strategy when it comes to conducting due diligence is exposure to countless credible sources. Never underestimate the value of tapping into experts in the field, either. For instance, review a trading blog widely cited by industry professionals. The more frequently the source is referenced by industry leaders, the more reliable it is likely to be. There are also numerous books and how-to guides devoted to “investing for beginners,” but many can be too dense for novices. That’s why arranging a consultation with a stockbroker is also advantageous if you want help interpreting what you learn on your own.
The final thing to remember is that you have a lot of options to consider when it comes to the stock market. There are generally 12 types of trades that you can make on the stock market, from limited market orders and day trades to trailing stop orders and extended hours trading. Much of trading depends on personal preference and professional experience, which means there is no right or wrong way to trade. And for anyone searching for unconventional opportunities, there’s also cryptocurrency trading for beginners.
Trading on the stock market is no trivial undertaking, but that doesn’t make it impossible and it certainly isn’t limited to mathematicians or trained financiers. One key is to have the right mindset well before getting into the weeds. While there’s no shortcut to success, those motivated enough can find plenty of promising opportunities.