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The importance of sustainability and patience!

Fast money or slow and steady?

We humans also quite often have a desire to get a result or reward immediately when we do something that we think is good for us. Imagine that you are at the gym three days a week doing strength training because you want to increase your muscle mass. When you look at yourself in the mirror after two days or two weeks, you don't see any noticeable change and start questioning whether this exercise is for you.

This is a classic example of wanting to see results quickly - preferably immediately after an action has been taken. However, this is not how it works; it takes time and requires continuous, long-term action to achieve the desired result.

My mentor once said;
"Two people decide to make a change in their lives. One wants to start eating one cinnamon bun a day and the other wants to take a 20-minute walk a day. After a week, nothing much has happened. Even after a month, you can't notice any difference. However, after 1 year, person one has gained 3kg while person two has lost 3kg. After a year, there have been a lot of cinnamon buns and a lot of minutes of walking."

The above may seem a bit comical but it involves a principle known as "the compound effect" or "the interest-on-interest effect".

It's exactly the same with investing - whether it's currency trading, stock investing or property speculation. You need to be patient and give it time. That's why by far the most common strategy in the stock market is to save monthly in stable companies and/or funds to let your money grow in the long run, rather than trying to pick the right time or the right company to buy.

When using an automated trading robot in the forex market, it is almost more important to take a longer-term view. Here we leave all trading to an algorithm to disconnect our own emotions, which reduces the degree of influence we can have on the trade. This is very nice as we can do other things during the day, but we must also be aware that every week or every month does not always provide a phenomenal return. What is interesting there is precisely how the return looks over 1 year, over 5 years and over 10 years. That's when those cinnamon rolls and walks really start to make a difference.

Unfortunately, there are many rogue traders out there who exploit our desire for immediate rewards. This usually manifests itself in guarantees and promises of high returns in a very short time, precisely to trigger the reward centre in the brain and make us think irrationally. We invest and start crunching numbers, dreaming and planning everything we can do with the money we earn in just a few weeks. And suddenly all the money is gone and the actor has disappeared without a trace. We realise far too late that it was not a legitimate operator and that "it was too good to be true".

There are many opportunities and different ways to invest your money, but the most important thing will always be consistency, patience and a long-term perspective.

"Rome was not built in a day" - Li Proverbe au Vilain

// Svenska Forexgruppen