When you watch people who are really good at something, the tendency is to say, “I could never do that, look at how much skill they have.” So when we see people who are investing, and profiting, during these turbulent times of flash crashes and flat portfolios we think we just lack the ability to be a savvy investor.
The reality is that being a smart investor has less to do with what’s in your head then what’s in your gut. The best investors have fear, but they have the ability to lessen the role fear plays in their investment decisions. Fear clouds our thinking. Instead of thinking rationally, we react emotionally. And emotional investment decisions are usually poor decisions.

Here are two ways to help you invest with confidence, even in this market.

Educate Yourself

In almost every aspect of our life, the unknown is worse than the known. It’s no different with investing. One reason why markets “behave” the way they do is investors tend to invest based on what they think will happen.
A quick review of current events lets you know there’s a lot of uncertainty. If you know that markets, and investors, hate uncertainty, you won’t be surprised, and in fact you’ll expect, to see a certain amount of volatility in the market. But in times of volatility, an informed investor can make money. By knowing what to look for when you’re looking at a company’s financial records, you can shut off the “white noise” that you hear every day and make a rational decision. This may include making smart buys even when the tide of investor sentiment is going the other way.

But education also serves as a reality check against misplaced optimism. Once we make money on a stock, we can easily fall in love with that stock as it drops, and fool ourselves into believing that it will bounce back. Clearly understanding what company financials are telling you can take the emotion out of walking away and cutting your losses.

Start On Paper

Paper trading is a simulated trading process in which would-be investors can ‘practice’ investing without committing real money.
According to TurtleTrader®, “Paper trades are powerful because they teach through suspense and surprise. They demonstrate rather than tell. Instead of simply reading about trading, you experience it, making decisions about potential trades, and then watching those decisions play out.”

And now that computers will do most of the calculations, you can practice as long as you need to before putting your own money at risk. There are even paper trading investment clubs that can join to practice different strategies and build your confidence.

There is no such thing as risk-free investing. And as long as there’s risk, there will be fear. A healthy sense of fear is always important when investing. After all, you’re dealing with your money. However, investing is one of the only ways you’ll be able to reach your long-term financial goals, and you can’t succeed if you’re not in the game.