Investment Tips – Rules to minimize risk

Investment Tips – Rules to success.

2. Investing is simple but not easy. (Decide in advance how much loss and maximum profit you want to collect)

Buy investments and wait until they rise is a widely used strategy. It seems simple and that’s it. Until there is to be sold:

  • In case of loss we wait, we propose the sale and is usually worse than the loss.
  • When we think of profit even more profits, so we propose the sale also. Until the profit falls back and we long for the higher price.

We come in a roller coaster of emotions right. Investing is frustrating that way: it is never good enough and can always be improved.

3. Hope is a good indicator. (Hope is sales)

When we buy stocks, we do so because we expect an increase. If the expectation is not met many investors hold their shares in the hope that the price is still rising. The moment why you find the hope of appreciation you thought becomes dominant, it is usually a good time to sell. Thereby to prevent excessive losses in any case.

4. Understand the advantages and disadvantages of a strategy before you trust him. Not confuse efficiency with a good strategy.

Investors evaluate a strategy often the result. In principle, this makes sense. But to what extent is the outcome due to luck? Take the example of the casino. You can play along with a keen player who seems to have a good day. The stack of chips are indeed proof. Still, it might be smarter to follow the strategy of the visitor to the casino. The strategy of the casino owner

5. Trading in markets with volume. No volume = despair.Investment Tips - Rules to minimize risk

A lack of participation in a market makes it difficult, if not impossible, to a position even anywhere near the desired price to sell. For every homeowner who dreams of a new home and therefore wants to sell his current home is the dream a nightmare at the moment there is no demand. The same applies to the fair. If you have shares of funds which hardly traded, it is difficult to get. Upon your documents Always check the volume of the market before you go on to purchase.

6. Accept loss, the part of the game. It’s okay to loose.

This is the difference between winning and losing. “It’s okay to loose” is a statement of the American Van Tharp, one of the best coaches in the investment field. What does he mean it? Winners understand and accept that you can not win. Every transaction They recognize their misjudgment and accept the loss, proceed to the order of the day and wait for another chance. Losers are often fighting with the market, they want equal while the market tells, in the form of loss, they are wrong. The loss is that (too) high and emotionally and financially certain level of damage.

7. Develop a strategy, test it and follow it with discipline. Success Factors.

Successful investors have one thing in common. They all have a strategy. The most important part of this strategy, risk management, investing with the right balance between risk and return. The choice of the technique, fundamental or technical, is less relevant. With both you can achieve success. Behind every strategy decision rules that are tested and assessed for their reliability. This gives the confidence to stick to the strategy. Difficult market fixed

8. Calculate in advance of their risk-return ratio. Relationship between risk and return.

This theory assumes that you are risking less money at an occupied position than what you can earn. Potentially When you buy a share is the stop-loss level, your maximum risk and your take profit level your maximum profit. This relationship between risk and return should always be positive. Imagine always invests with a ratio of 1:3 between risk and return. If you use this ratio to more than 50% of the trades go wrong and you can still make a profit. It goes like this:

You take three positions with a stop loss of $ 200 and you have a risk-return ratio of at least 1:3. Position 1 loses $ 200, position 2 and position 3 wins $ 600 lose $ 200. This means that only 33% of these trades have gone well. Nevertheless, there is a final result from + $ 200.

9. Less is more. Know what you are taking.

It’s hard to fathom a market completely, it is impossible to trade on different markets and to understand all at the same time. The fundamental, technical and psychological information that is needed to performed more than a few markets is successful more than you can manage when an individual. For an investor, it is important to have focus. Avoid not see the forest for the trees. Rather see a few funds fully than many funds incomplete.

10. Limit your losses. Know what you need to win when you lose.

We can not stress enough how important it is to limit your losses. (Vooraf!) Drops a 50% share, then the share should rise 100% to come again. At the entry level , The proportion of 75%, then the share should rise to 300% loss working away. Drops a 90% share, then the share should rise 900% to catch up again. The run through of losses makes sure that there is an unrealistic increase must follow the plus come again.

11. Risking per trade no more than 2% of your total investable assets. An opportunity leads to no chance.

For anyone who is (partly) concerned with short-term investments is recommended to not exceed 2% of the total capital per trade to deploy it. Why? Imagine you have $ 100,000 to join occurred. When you per trade than 10% of the power input and you lose 10 times then the tide and conclusion. No money, no game. Even if you lose nine times in a row then the 10th trade be extremely good to make losses. Well again You have just learned how impossible that is.

12. Headlines are the perfect indicators. The market always looks the worst out of the soil and the best at the top.

Step in when no one boarding and alight when everyone get out. This sounds like a truism, but it is not so obvious. It is difficult to step in when everything and everyone you hereby fool says to want to do this. Conversely, this is also true: when even your uncle who always invest but was nonsense, on the anniversary of your mother proclaims that he has bought shares then you know one thing, the market becomes saturated and the demand naa shares nearing its highest point. So get off. At the moment the front page of the Telegraph in the largest and thickest font headlines ‘oil price continues to rise’ then that is the time to ask how likely it is that he is going to drop. Correct yourself

13. Sleep well. Rules of life.

Wakefulness means stress, doubt and emotion. These are precisely the worst ingredients for a successful return. Therefore know what your risks are. When you can not sleep therefore you should ask yourself honestly whether investing something for you. From this perspective, the rules for investing not so different from the “rules of life”: accept that you live in a world of uncertainty, do not expect the impossible and trust no foreign (read: not to act with products that you start do not know). When you towards your investments adopts the same attitude as the realistic attitude for your current welfare has created then you need not to stay. Empty-handed not afraid

1. Always keep yourself to your investment plan outlined

You asked probably wondering where one rule remained. This is it, our rule number one. Why do we tell our first line as last? Rule 1 should be written on paper, but the concrete implementation of this we can not tell on paper. The right trade plan with the correct approach and method to more efficiency requires more than a simple document with rules and a roadmap. The correct trade plan must be learned. It requires a practical explanation, practical, psychological explanations, interaction and not unimportant, your personal situation. Ouderwetst in the classroom so. Our roadmap would also begin when following a workout. You can also very good practice with a demo account with a broker or as plus500 24option.