Wealthy traders and investors have a routine.

Greed and fear are the most powerful emotions in the stock market and can be used to make profits if used wisely. History is full of such examples where these two emotions have stopped investors from making rational decisions, which they later regretted.

The stock market does not linearly give profits. Investors, who invest when everyone is fearful and stock prices are reasonably low prices are rewarded with excellent returns. It does not matter if a company is a blue-chip or a top-growth company, the returns are non-linear. Rich traders and investors are aware of this phenomenon in the market. Rich traders are smart enough to change their strategy according to the market environment, and rich investors are brave enough to capitalize on the fear of amateur investors and traders. The stock market generally has the strongest average returns compared to other asset classes in the long run. But if we invest during corrections, the returns are even higher than average and increase the alpha of our investment.

What can we learn from wealthy traders and investors so that we do not need to worry during market corrections?

• First of all, they always follow their investing or trading rules. This prevents them from becoming irrational as a result of the market's decline.
• They do not just buy a couple of stocks. A small number of stocks are extremely vulnerable if the market suffers a big decline. Within the investment timeframe, they maintain a range of 10-20 stocks from disparate sectors that exhibit minimal correlation. This decreases the portfolio drawdown.
• They do not get excited or disappointed by daily, weekly, or even monthly market volatility. If the investment is performing as expected, that is all they need.
• They protect their downside investment by investing or trading in low-volatility securities. However, they tolerate volatility up to a certain acceptable threshold to attain returns higher than average. (There are also high volatility strategies, but they are not in the grasp of retail investors.)
• Rich traders and investors regard price declines as a natural and healthy part of investing in the stock market. At such a period, many wonderful companies are found at a fair price. This is the perfect time when rich investors move from one stock to another and test their smartness. This is the most important action for long-term investors.
• Wealthy traders and investors do not predict the market. They trade or invest in securities or strategies with high expected returns, which they calculate using methods like technical analysis projections, fundamental analysis, macroeconomic analysis, or quantitative analysis.
• Their method is such that at the time of changing investments from one security to another, the system compounds the returns.
• Their realistic return expectation is 15%-25% annually. The world's richest people grow their investments at this rate.
• They know that over 100 years of stock markets, the reality is that prices always go back up eventually, so they avoid pulling their money out when stock prices drop. They are the most bullish at market corrections.
• They stick to their investment plan and don’t let panic sway their decisions.