People are searching for tips in any area of life. The same can be said about investing. They look at more experienced investors and want to see why those investors became who they are today. It is quite clear that those successful people followed some rules and had very specific strategies that brought them success. I have been interested in the topic for a long time and will try to cover some of the tips that can help us to become better at making investment decisions.
Buy more risky securities to get bigger return on your investment. Depending on what kind of investor you are risk can be a very good tool to increase your profits. Why? The bigger the risk, the bigger your potential reward can be. So, if you want not just secure investment instruments, but bigger than average profits you have to look for less safe securities, analyze them and if you see that they have potential to grow dramatically; buy them. If you are a conservative investor, do not follow the tip. However, you should remember that investments are not risky at all; they will probably have very low possibility for bigger than average profits.
Another idea that may seem shocking to you, but it is true and that is: buy when everybody is selling and sell when everybody is buying. Crowd is wrong almost all the time. It buys at the top and sells at the bottom. It is run and controlled by emotions. You cannot be a good trader if you make decisions based on your emotions, good or bad. Base those on your logical investing principles and you will be ahead of everybody. Buy when prices are low and everybody is afraid to buy and sell them high when everybody wants to buy from you.
Trade in the direction of the prevailing trend. Traders have famous clichés. One of them is: do not try to catch falling knives. This is what most traders do when they go against trend. When prices are falling you need to wait till they stop and start forming a bottom. The same can be said about a rising market. Do not sell if prices are constantly rising. Wait for some signs of a reversal. When prices fail to go higher start selling.
Learn to focus on a few securities. Concentration is key to trading successfully. But you cannot have it if you try to concentrate on one hundred or even more stocks. You will lose focus, because various securities can go to various directions at a time and you may be confused as to which security goes where and which ones you should pick up for buying. Pick out two or three and follow them diligently. When you see the best situations for buying use them without any doubt.
Reduce your losses and make your profits grow would be my final tip. If you learn how to cut your losses quick profits would take after themselves. Most traders would quickly become successful if they just learned this rule. Let your profits be at least twice as big as your losses and you will have only every third trade to be successful in order to break even. If you do better than that you will have profit.
Hope the article was useful. I also recommend reading my article on top 15 Forex trading strategies. If you are interested in the topic, click here. Wish you to become a successful investor.
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