A Room without books is like a body without a soul – Cicero

Like any other skill, reading book(s) is a must if you want to learn in financial markets continuously.
Here are the Top 10 must-read books we recommend you should read as a beginner.

• Principles: Life and Work – Ray Dalio
• The Intelligent Investor – Benjamin Graham
• The Little Book of Common Sense Investing  – John C. Bogle
• A Random Walk Down Wall Street – Burton G. Malkiel
• Psychology of Money – Morgan Housel
• One up on wall street – Peter Lynch
• Market Wizards – Jack D. Schwager
• Technical Analysis of the Financial Markets – John J. Murphy
• The Big Short – Michael Lewis
• When Genius Failed – Roger Lowenstein

Next Read:10 key questions in your trading plan – why, what, how?

Trading & Investing in financial markets is a professional activity and your trading plan is a tool which can help you have clarity on what, why and how you are doing it. Here are the top 10 important questions and answers you need to know about the trading plan which can help you to make better decisions.

Risk comes from not knowing what you’re doing – Warren Buffett

Q: What is a Trading & Investing plan?
A:
A trading plan is a document which has information about your goals, strategies and most importantly why you are trading & investing in financial markets. 

Q: Why do you need a Trading & Investing plan?
A:
Trading & Investing in financial markets involves you having to make regular decisions which mostly are to do with buying, selling, and holding financial securities. Having a trading plan will help you to be calm, and rational and avoid making bad emotional decisions which can be costly sometimes!

Q: How you should use the Trading Plan?
A:
As a best practice, you should look at your trading plan before you enter /exit a trade or investment.

Q: What are the key questions you should have answers for in Trading Plan?
A:
Here are the top 10 questions you should have answers to in your Trading Plan.
1 What are my Short ( 1-2 years ) & Medium ( 3-5 years ) term goals?
2 How much trading capital do I have?
3 What markets will I trade and invest in?
4 What is my risk-reward ratio?
5 Do I have sufficient Market knowledge or do I need to do some training?
6 What are my criteria for entering into trade/ investment?
7 How will I manage /monitor my positions in the market once they are open?
8 What are my risk management rules per trade? i.e Document your total capital// budget for trading, risk /reward ratio?
9 How many hours do I have to commit daily / weekly for trading/investing?
10 What type of trader am I?

Q: What are the potential consequences if you don’t have a personal Trading Plan?
A:
Bad decisions, Fear, Anxiety, Greed, Becoming Irrational, and Financial losses.

Q: How often to review & update your Trading Plan?
A:
You should attempt to review it every week and update it every month if necessary.

Q: Is there a basic trading plan template I can start using?
A:
We have put together a basic trading plan template which you can start using and customize according to your needs. You can download it here.

Next Read: What is the difference between financial trading and investing?

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Financial Trading & Investing strategies are used by millions all around the world to grow their wealth. As a beginner, here are the most important answers you need to know to understand the difference between trading and investing in financial markets.

Q: What is Financial Investing?
A: Financial Investing is a medium to longer-term (months/ years!) approach to profiting from the price movement of financial assets.
Q: What is Financial Trading?
A: Trading is a shorter-term ( months, weeks, days, seconds! ) approach to profiting from the price movement of financial assets.

Q: What is the difference between Investing and Trading?
A:

Trading & Investing in financial markets is now easier than ever for retail traders with financial markets open 24 * 7. Don’t be surprised if you will feel burnt out at some point as Trading & Investing can be hazardous to your wealth and also health!

Here are the most important questions and answers you need to know about trading / investing burnout which can help you to handle burnout better and maybe avoid it!

Q: What is burnout?
A: Burn-out is chronic stress and is characterised by a person’s feeling of complete physical & mental exhaustion, negativism/cynicism towards one’s job and reduced professional efficiency. World Health organisationrecently added occupational burn-out to the 11th revision of The International Classification of diseases to guide medical practitioners!

Q: What is the difference between Stress and burnout?
A: Stress is a shorter-term symptom and it is mainly an inability to cope with pressure/overload. Burnout happens over a longer-term resulting in a negative mental state/disillusionment.

Q: What behaviours in your trading/ investing journey can cause burnout as you are participating in Financial Markets?
A:

• Investing/trading real money without a plan/ strategy or with unrealistic expectations/goals – i.e without why, what and how.
• Spending too much time in front of the monitor/screen (s) for no purpose or reason.
• Not handling short-term stress-related symptoms.

Q: What are typical symptoms of burnout?
A:
Although burnout and stress symptoms differ from person to person, Below are some of the typical symptoms most traders and investors experience:

• Negative feelings/cynicism/pessimism towards markets, family and friends and general day-day things.
• Emotional detachment/disengagement from your once very close personal and professional relationships.
• Mental and Physical fatigue and exhaustion.
• Showing anger/irritation for no reason.
• Anxiety while doing day-day things – for example looking at charts & reading news.
• Feeling unmotivated to participate in financial markets and feel like taking a break.
• Abnormal sleeping patterns – sleeping less or sleeping more than usual.
• Accusing / Blaming others for your mistakes.

Q: What will be some of the consequences of burnout if you don’t handle it?
A:

• You will make bad financial investment/trading decisions – basically the risk of losing money.
• Negative impact on your personal and professional relationship(s).
• Unproductive on a day-by-day basis and impact on your personal/professional life.
• Impact & deterioration of your physical, emotional and spiritual health.
• Impact on your Personal and Professional life.

Q: Handling Burnout: How to handle burnout as a trader/investor in financial markets?
A:
Evaluating and acknowledging you are in a burnout state is the most important first thing.
Then here is a three step ( 3T’s ) approach from FalconFunda which can help you can to handle burnout.

• (T)ake a break & review: Take a break and ask yourself what part of my trading/ investing journey is causing me to burn out?. Make a list. Example: FOMO investing and incurring losses and anxiety, bad decisions, too much time in front of  a trading screen(s) etc,
• (T)ake back control: Ask yourself what can I do differently? For example, if spending too much time in front of the trading screen is the reason for bad decisions and losses then take back control by setting boundaries and strict limits on daily screen time which will help you take back control and aid in your recovery and practice self-care by sleeping for the required number of hours and schedule time for activities you enjoy & cause you happiness: Relax, Hobbies, Friends, Family!
• (T)ake professional help: If your remediation efforts are not helping, ask and regularly take professional help & advice if needed. This will help you to recover quickly!

Q: Avoid burnout: What can you do as part of your financial trading / investing journey to avoid burnout?
A:

• Have a trading plan: Document a strategy/purpose before trading / investing in financial markets and continuously refine it – This will give you a perspective on why, what, when and how!
• Maintain a personal trading journal: Document and regularly go through your investments and decisions.
• Self-care: Regular screen breaks: Limit your time in front of your screen. Have a reminder to take a screen break. You can read more tips from the American Academy of Ophthalmology. Identify physical activities you enjoy doing which can aid your mental health and shorter-term stress relief. Read the paper from the National Library of Medicine.
• Handle day-day stress: Pay attention to shorter-term stress because of your personal/professional life activities and remediate them. Seek professional help if needed.
• Practice daily & lifelong Learning: Embracing daily and lifelong learning of new things can have a positive impact on your mental health and mindset and also boost your confidence. This will give you the capacity & confidence to cope with stress-causing factors in your life!

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R ead Next: Market Crash 2022

So financial markets have crashed this week and are still very volatile. Here are the most important things you need to know about the market crash.

Market Crash Definition: A market crash happens when indexes ( S&P 500, Dow Jones ) and individual securities ( Stocks, Crypto) prices in the financial markets have a double-digit drop in prices.

Main Reasons for 2022 Market Crash:

• Recent Bank Interest rate hikes which are primarily driven by inflation.
• Supply chain / Import-export issues are continuing to happen after being triggered by COVID-19 and the Europe energy crisis with Russia / Ukraine war.
• Quantitative tightening: Government selling the assets acquired in the past – during COVID!
• Investors’ sentiment that economic recession is in progress and panic selling of securities ( Stock, Crypto etc ).

How often do market crashes happen? Recent examples of market crashes are below: 2020 Covid Crash 2010 Flash Crash 2008 Global Financial Crisis & Housing Market Crash 2000 Dotcom bubble Crash1987 Black Monday Crash 1929 Crash & Great Depression Full list here

Are we in the bear market?
Yes.

How long will the bear market last?
Bear markets usually last from months to years. The fact is that most bear markets have shorter life spans than bull markets!

Financial Market Crash Vs Recession?
A financial market crash doesn’t mean there will be a recession but most recessions cause financial market crashes – the 2008 Global Financial crisis for example!

What are the different phases investors/traders go through as part of a Market Crash?

Phase 1: Hyper optimism & Peak!
Phase 2: Correction of prices!
Phase 3: Market Crash
Phase 4: Speculation & Temporary Bounce back of prices!
Phase 5: Continuous Decline & Rock bottom!
Phase 6: Optimism / Bullishness

What happens when the financial market crashes & economic recession happens over a longer time?

1. Investors lose money.
2. Investors lose confidence.
3. Companies/ Businesses struggle to raise money so they lay off employees which leads to less economic output and causes an economic downturn and negative investor sentiment.

What are the most important things you should do as a trader/ investor during a Market Crash?

Consider using a 3(R) strategy to deal with the market crash.

(R)eflect: Reflect on your strategies and goals by going through yourtrading plan.
(R)eview: Review your portfolio/investments/trades and research for market opportunities.
(R)ecalibrate: Act on your reflection, review and research to either buy, sell or hold. Don’t be a sheep!

The best thing you can do during market crashes is to have a healthy cash balance!

PS: What goes up, must come down and What goes down may come up!