The idea of making money trading shares sounds fairly straight forward to most of us.
It means you buy at a low price, sell at a high price, right? In theory yes.
But why is it and how is it that not everyone makes money from the share market and why is that your retirement savings are looking completely shattered at the moment? The answer is offensively simple, it's all about protection.
If you did not protect your new shares you bought, or you have not protected your retirement savings or superannuation, 401K or whatever you're counting on for retirement, then you will lose it.
Investing takes money, and that is why some small players get wiped out rather quickly when they don't know what they're doing.
So here are the top 5 principles used by Savvy Investors 1.
Look at the Performance Profit history of your portfolio.
Investors want to make money, a simple concept to grasp.
To maximise profit savvy investors look at benchmark figures to see how each type of fund performs.
New investors, who simply jump in and buy at the earliest opportunity because it looks good, are usually in for some disappointment.
Without doing one's homework and learning about the share market, one is basically shooting in the dark and running on hope alone.
The share market is a very expensive casino for the uneducated investor.
For most retirement funds, who are tasked with getting the greatest return, usually at the highest risk, by people who are incentivised to take the largest risks they can.
This is why your retirement savings have taken a smashing over the past few years and they're not looking much better.
Considering the performance history of your portfolio is essential when you're unsure of how to trade your way out of a difficult position.
Knowing what a share can be worth from its high point to its low point is critical, and understanding what influenced those pricing fluctuations is even more important.
2.
Leverage on the flexibility of trading shares Many of us hear the horror stories or rumours of people, friends and family losing their life savings in their effort to learn how to trade shares.
This is enough to put anyone off the share market.
The share market is risky, like any other business, if you don't understand it.
Learning is a lifelong endeavour for all of us.
If you're not learning and growing, you're dying, and if you're reading this, you're probably not looking at dying any time soon.
Trading shares, like anything in life, is all about making informed decisions.
People lose money when trading unnecessarily.
Shares in companies, depending on the type of security they've purchased, are extremely flexible.
Most people aren't aware of their options from the start and instead of spreading a risk across a number of assets such as listed companies, bonds or commodities; they buy one share that they know little about like backing a horse at the races.
As simple as this may sound, most people are not educated anywhere near enough in this field to make such decisions on the options available to them, or to design a strategy that suits them and where they're at in their lives and their finances.
The lesson here is to get yourself educated and learn about your options and how flexible the share market can be for you.
3.
Do not act or rely on guess work when learning how to trade shares It's obvious to most that trends in shares on the stock market can change very quickly.
This is how people lose money they rely on their gut instincts, which are not equipped to make correct judgements.
It is never smart to guess on a trend before it actually happens, you can only rely on what is real evidence.
On occasion your gut may be right, and that is a random act of chance.
When it's not right, when the gods of chance have turned away in the seconds it takes to wipe you out, you can certainly lose your investment.
Always wait for confirmation on a trend, on a movement, before you commence your transaction on a share.
4.
Always avoid crowded share trades based on the market's mob mentality The mob can lose it's logical mind because of the collective state of mind that some people have brought to the mob, and influenced the greater mentality.
When we think as an individual, we soon come to our senses and realise what our individual decision needs to be.
The secret to successful trading is leveraging the crowd insanity to our own individual advantage.
This is learning to trade the intelligent way.
An example of this is a panic sell off in a particular stock.
When the price hits its lowest, and it has plummeted for no real reason aside from a mob panic sell off, this is an opportune time to buy, wait for the price correction to take place to its normal market value, and then sell back to the mob who have driven the price back to where it originated.
This is intelligent, independent trading.
5.
When in doubt, leave it out When you are making doubtful decisions, you're putting your assets at risk, and this is where real risk is born.
The risk lies with the investor, not the market.
This is the most difficult principle to accept, although the most simple on face value.
Many will forget this principle in the heat of a trade, when fear takes over and the anxiety of missing a so called once in a lifetime opportunity is flashing past you.
Always remember that opportunities always come around, and that the market is cyclical.
This is why you can learn the market, because it behaves in cycles that can be tracked and measured.
Learning how to trade shares is applying long term strategies for consistent gains that will benefit you throughout a very long life it is not about short term, random wins of fortune.
Keep a clear head.
Ensure you're fresh and at your best.
When you apply these principles to your strategies, your trading life will be simpler, predictable, and calm.
It is after all, merely a system.
It means you buy at a low price, sell at a high price, right? In theory yes.
But why is it and how is it that not everyone makes money from the share market and why is that your retirement savings are looking completely shattered at the moment? The answer is offensively simple, it's all about protection.
If you did not protect your new shares you bought, or you have not protected your retirement savings or superannuation, 401K or whatever you're counting on for retirement, then you will lose it.
Investing takes money, and that is why some small players get wiped out rather quickly when they don't know what they're doing.
So here are the top 5 principles used by Savvy Investors 1.
Look at the Performance Profit history of your portfolio.
Investors want to make money, a simple concept to grasp.
To maximise profit savvy investors look at benchmark figures to see how each type of fund performs.
New investors, who simply jump in and buy at the earliest opportunity because it looks good, are usually in for some disappointment.
Without doing one's homework and learning about the share market, one is basically shooting in the dark and running on hope alone.
The share market is a very expensive casino for the uneducated investor.
For most retirement funds, who are tasked with getting the greatest return, usually at the highest risk, by people who are incentivised to take the largest risks they can.
This is why your retirement savings have taken a smashing over the past few years and they're not looking much better.
Considering the performance history of your portfolio is essential when you're unsure of how to trade your way out of a difficult position.
Knowing what a share can be worth from its high point to its low point is critical, and understanding what influenced those pricing fluctuations is even more important.
2.
Leverage on the flexibility of trading shares Many of us hear the horror stories or rumours of people, friends and family losing their life savings in their effort to learn how to trade shares.
This is enough to put anyone off the share market.
The share market is risky, like any other business, if you don't understand it.
Learning is a lifelong endeavour for all of us.
If you're not learning and growing, you're dying, and if you're reading this, you're probably not looking at dying any time soon.
Trading shares, like anything in life, is all about making informed decisions.
People lose money when trading unnecessarily.
Shares in companies, depending on the type of security they've purchased, are extremely flexible.
Most people aren't aware of their options from the start and instead of spreading a risk across a number of assets such as listed companies, bonds or commodities; they buy one share that they know little about like backing a horse at the races.
As simple as this may sound, most people are not educated anywhere near enough in this field to make such decisions on the options available to them, or to design a strategy that suits them and where they're at in their lives and their finances.
The lesson here is to get yourself educated and learn about your options and how flexible the share market can be for you.
3.
Do not act or rely on guess work when learning how to trade shares It's obvious to most that trends in shares on the stock market can change very quickly.
This is how people lose money they rely on their gut instincts, which are not equipped to make correct judgements.
It is never smart to guess on a trend before it actually happens, you can only rely on what is real evidence.
On occasion your gut may be right, and that is a random act of chance.
When it's not right, when the gods of chance have turned away in the seconds it takes to wipe you out, you can certainly lose your investment.
Always wait for confirmation on a trend, on a movement, before you commence your transaction on a share.
4.
Always avoid crowded share trades based on the market's mob mentality The mob can lose it's logical mind because of the collective state of mind that some people have brought to the mob, and influenced the greater mentality.
When we think as an individual, we soon come to our senses and realise what our individual decision needs to be.
The secret to successful trading is leveraging the crowd insanity to our own individual advantage.
This is learning to trade the intelligent way.
An example of this is a panic sell off in a particular stock.
When the price hits its lowest, and it has plummeted for no real reason aside from a mob panic sell off, this is an opportune time to buy, wait for the price correction to take place to its normal market value, and then sell back to the mob who have driven the price back to where it originated.
This is intelligent, independent trading.
5.
When in doubt, leave it out When you are making doubtful decisions, you're putting your assets at risk, and this is where real risk is born.
The risk lies with the investor, not the market.
This is the most difficult principle to accept, although the most simple on face value.
Many will forget this principle in the heat of a trade, when fear takes over and the anxiety of missing a so called once in a lifetime opportunity is flashing past you.
Always remember that opportunities always come around, and that the market is cyclical.
This is why you can learn the market, because it behaves in cycles that can be tracked and measured.
Learning how to trade shares is applying long term strategies for consistent gains that will benefit you throughout a very long life it is not about short term, random wins of fortune.
Keep a clear head.
Ensure you're fresh and at your best.
When you apply these principles to your strategies, your trading life will be simpler, predictable, and calm.
It is after all, merely a system.
Source...