Anyone who has ever invested their hard-earned money in the stock market is familiar with the emotional roller coaster that it can often be. The psychology of investing is arguably one of the most important factors to be aware of when navigating the financial markets – and like most things, gets easier with experience.
So, how do professional traders handle it when emotions run high? eToro Popular Investor Mimi Ho (@KoraTrades) shares how she keeps her cool when trading, and even capitalises on fear in the markets.
“Be greedy when others are fearful”
Warren Buffett is famously quoted as advising investors to buy when others are fearful. The logic behind this recommendation is that when investors shy away from an asset, its price often drops to below its true value, turning it into a good value investment opportunity.
Ho agrees. “My investment strategy involves a combination of short, medium, and long-term holdings, with frequent profit-taking during volatile times,” she says. “I prioritise diversification and capitalise on market sentiment, buying during times of fear and selling during times of greed. While I rely on technical indicators, I also place a strong emphasis on the psychology of investing.”
Self-made success
Ho’s background is originally in business, technology, and psychology – in which she holds a Master’s degree – with successful investing and money management actually coming later. The native Australian had her own tech-based business for many years, and during that time began dabbling in trading stocks and cryptocurrencies.
The dabbling eventually led to such success that it enabled the self-taught Ho to embark on a new career as a full-time trader while travelling the world. Now she shares her knowledge and expertise with thousands of followers and copiers on the eToro platform, who appreciate her no-nonsense approach. “The two rules I live by are to never trade with emotion and to seek new opportunities in the most challenging of times,” says Ho.
Emotionally challenging times
The more uncertain the markets are, the easier it is to get swept up in emotions along with the abrupt jumps and dips. According to Ho, an investor’s ability to be patient and adapt to market conditions are key.
“By maintaining a logical, composed, and patient approach to trading, I remain adaptable to shifting economic conditions,” she explains. “I have had to navigate through market volatility caused by unforeseen events such as the Russia-Ukraine conflict, Covid-19, and the collapse of cryptocurrency exchanges. Remaining adaptable and modifying my strategies when required have enabled me to recover any losses and maintain my profitability.”
Sentiment is social
Certainly investors’ decisions can be negatively influenced by herd mentality – whether driven by panic or optimism – when following the crowd in lieu of their own analysis. But being part of an interactive social investing environment can be uniquely leveraged for good, as a source of knowledge and crowd wisdom.
“eToro’s social platform has facilitated easy connectivity and interaction with fellow investors, creating a supportive and informative community. This has allowed myself and others the opportunity to excel in the realm of investing,” says Ho. “It’s very user-friendly, providing a straightforward approach to investing.”
In a community of 30 million users, you can really feel where market sentiment is going. The eToro news feed is full of posts and updates on everything that’s happening right now in markets all over the world. And, of course, you can learn from the real-time trading moves of Mimi Ho and thousands of other Popular Investors!
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