Anyone can invest in stocks. All you need is some money and a brokerage account. However, there are certain traits that you must possess or seek to possess to be a good investor. Below lists some of the important personality traits of a good investor.
One of the most important aspects that a good investor has is a strong discipline. You need to be disciplined to come up with a long term investment strategy and follow your investing principles. Good investors do not buy a stock just because somebody gave them a hot tip or because an analyst has upgrade the stock to a buy. They do not let their emotions take control of them when buying or selling but rather follow a disciplined process.
Sometimes, stocks can drop substantially in price before they increase due to unexpected negative shocks in the market. Many investors panic when seeing a market correction and sell their winning stocks quicker than they should. Good investors understand that fundamentals will prevail in the long run and only sell stocks which have deteriorated fundamentally. Sometimes it takes a year or even more to see substantial profits. However, do note here that not all stocks will recover their losses. There are stocks which have poor fundamentals that never recover from a stock market crash. Hence, it is always more prudent that you buy a stock with good fundamentals.
Able To Take Losses
A good investor understands that not every trade will be a success. They know that companies change over time, either for the better or for the worse due to changing business environments. When a stock has deteriorated fundamentally, they are able to cut losses before it gets too large instead of letting it stay in the portfolio to incur more losses. They are able to strike a balance between being patient with regards to their stocks with good fundamentals and being able to cut their losses for stocks which have poor fundamentals or which are overvalued.
Moderate Risk Appetite
Most good investors have a moderate risk appetite. They understand that there are risks involved in investing but are not afraid of the volatility in the market. They know that market forces are beyond their control and sometimes the stock market can be depressed longer than it should because of fear and low investor confidence. As such, they are able to ride with the volatility with the stock market and always look out for good opportunities to buy.