The Top 3 Tips to Becoming a Successful Investor

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Like most investors, one of your top goals has been to enjoy a financially secure retirement at whatever age you choose. That being the case, it stands to reason that your retirement “nest egg” should ideally generate above-market returns, often with below-market risk.

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The Top 3 Tips to Becoming a Successful Investor Like most investors one of your top goals has been to enjoy a financially secure retirement at whatever age you choose. That being the case it stands to reason that your retirement “nest egg” should ideally generate above-market returns often with below-market risk. But to do so you need to have a plan in place. For example:

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No. 1 – You Must Have Stop Losses in Place Any time you enter a trade consider what would happen if that trade failed. You’d never want to see 80 of your trade wiped out on a pullback right So it’s always a good idea to set a stop loss of -25 for example. Should your favorite trade fall your downside is limited by that stop loss. Another is the trailing stop loss – the very exit strategy that removes all emotion from the trade. If your stop is hit you’re out automatically. There’s no second-guessing. If your stock pushes higher the trailing stop resets higher too never triggering until it plummets. For example let’s say that in the middle of January 2019 I risked 10000 on a small-cap stock that trades at 10. When the stock reaches 16 I’m sitting on good money. All of a sudden the stock starts to fall to 11 because the run is ending and as others panic on the pullback. What to do Panic and sell like a fool Or protect the gains I have without emotion

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I’d choose the latter with a -10 trailing stop for example which means if the stock now pulls back 10 from current prices I’m automatically stopped out no questions asked. Step No. 2 – Have a Plan Have a complete 360-degree view of what you’re buying before you buy it. Fundamentally take a look at what’s under the hood of the company with regards to earnings ratios. Technically understand what’s happening in the short- and long-term with support and resistance. Know your exit strategy and your money management strategy including stop losses and trailing stop losses. Never risk money you cannot afford to lose. Keep your expectations in check be realistic. And above all else never risk more than you can afford to lose. Step No. 3 — Know Where the Best Profit Opportunities Are I tend to search for investment ideas in ​small-cap stocks ​. That’s because most are insulated from geopolitical issues such as trade war fears. Remember small caps

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have much less exposure to international headaches than companies in the SP 500. Even better small-cap stocks have a history of outperforming large-caps returning an average gain of 12 a year over the last 90 years as compared to a 10 annualized gain on the SP 500 as reported by Market Watch. Resources ​https://www.fierceinvestor.com/the-top-3-tips -to-becoming-a-successful-investor/

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