You may have heard the old, Chinese curse that states “May you live in interesting times.” For investors it seems that this curse has come to pass. Market volatility is through the roof, with the stock market swinging wildly up and down like some sick carnival ride, and taking investors with it every day .

What do you do if you are a beginning investor; still brand new to the world of finance and investing ?  Over 50% of Americans polled in recent survey, think that their best chance for financial security is to stumble on a list of the most picked winning lottery numbers. This beginner’s guide to investing can give you some of the information you need to invest your money successfully.

Goals
If you are just getting started in your investing journey, much as with many other of life’s endeavors, the first thing you’ll need to do is make a plan. The plan will answer a few questions so you can achieve your goals. In fact, that is the first question you must answer. What are your investing goals? Are you trying to stash away a retirement nest egg, saving for the kid’s college education, or stashing a little away, just in case? How much money will you need?

When Will You Need Your Money?
What is the time horizon for your investment strategy? In other words, when will you need the money? You’ll have a different strategy if you’re in your 50′s and nearing retirement, than if you’re fresh out of college and have 40 years of work ahead of you.

Risk Tolerance
How risk averse are you? If you’re the type that abhors risk, there are certain investments that are just not for you. In general, riskier investments will give you a higher rate of return, at a cost of possibly losing a good portion of your growth, or even your principle. You’ll want to structure your investment portfolio to take into account your personal taste for risk.

Income or Growth
Are you investing for income? If you are looking for your investments to provide you with a long term income, with regular payments you can use to live on, you’ll need to structure your portfolio accordingly. You will want instruments that pay you regularly. Stocks that have a good history of paying a regular, quarterly dividend would be one such instrument. Bonds would be another way to receive a regular income stream that one could use to live on. In most cases it is prudent to keep risk to a minimum if you’re investing for income. If you are truly counting on those investments to provide your income into the future, you could find yourself back to work in short order if a problem were to decrease the value of your holdings .

Many people invest for growth. This tends to be a riskier strategy, but for younger people who have plenty of time before they need their money, this is less of a concern. If you’re trying to amass as large a nest egg as possible than you’d want to target maximum growth, remember that you’re but one market fluctuation from disaster .

Don’t Put All Your Eggs in One Basket – Diversify and Live to Invest Another Day 
Most investment experts recomend a sound diversification strategy. Diversification is a process of acquiring different investments that are each affected differently by economic factors. For example transportation stockks will be highly affected by fuel prices, while high tecfh investments will be less affected by them. This strategy looks to reduce your risk exposure and maximize return by allocating a mix of investment vehicles, each with different risk exposures. In addition a well diversified portfolio uses instruments that are exposed to risk from different areas.

For example,  you might have some shares in blue chip companies (large, well established, historically strong) in various sectors, such as transportation, mining, consumer goods, and tech stocks. You could then mix those blue chip holdings with some small cap (smaller, younger companies whose market capitalization, or the total value of all their stock, is between $300 million and $2 billion) stocks to round out your portfolio.

The whole point of diversification is to protect your assets by helping to ensure that no one economic or local problem can drastically affect all your holdings. That is why a well diversified portfolio has different companies from different industries.

Stocks vs. Bonds When most people think of investing, stocks are the first thing that spring to mind. A share of stock is simply a piece of the company. You are actually a part owner of the firm, and you own more of the company for each share that you buy. You’ll share (no pun intended) in the fortunes of the company as it grows and becomes more profitable. Many companies also pay out portions of their profits every year or quarter in payments to shareholders called dividends. You can reinvest these dividends in more of the company’s shares, or keep the funds for other purposes. Companies typically sell shares of themselves to raise money so they can finance growth.

Whereas stocks are ownership in a company, bonds are basically loaning a company money in exchange for being repaid your money with interest ,over time. They are shares of company debt. . Basically, a company that needs an infusion of cash borrows the money from investors by selling them bonds. The bonds are then repaid over a specific time period. These bonds are traded like stocks. It is often the case that stocks and bonds perform inversely with respect to each other. That means when one increases, the other declines. .

Municipal Bonds
Certain kinds of bonds are the financial instruments used by local government entities to bring in money for public projects like highways, bridges, schools, parks and libraries . These spcial bonds are called municipal bonds. They often have lower rates of return than corporate bonds, but their proceeds are normally tax free, and they are often lower risk than corporate, although there have been instances where cities have defaulted on their bond obligations .

Where to Trade Stocks and Bonds
Stocks are traded in places called stock exchanges . These can be an actual building full of people making trades, or they can be a virtual exchange that exists purely in the computer world. The New York Stock Exchange is an example of a physical stock exchange, whereas the NASDAQ is a virtual exchange. The trades made in both are just as real and you’ll find examples of solid companies on both exchanges.

One of the most exciting things to come down the pike for the individual investor is the rise of online discount stock brokers. This allows the average person to become a very hands on investor at previously unheard of prices. In the past, all stock trades had to be done through a full service broker, which charged a pretty penny for their services. They often earned their money, because they had access to all the important information that was required to make good stock trades. Now, however most of that information is at the fingertips of anyone with a computer, so people can make their own, well informed investment decisions.

One thing investment experts and financial professionals are in universal agreement about is the need to start investing early. You will reap far greater benefits by starting early than if you wair even a few years, and you may never be able to catch where you would have been, all due to the power of compound interest you harness by giving your investments more time to grow. Compounding harnesses investment gains and reinvests them. The power of compounding means that an investor who starts early and invests wisely is almost assured of amassing a very large nest egg . Starting early is the key to an enjoyable retirement. So go out there and get started. Your future depends on it. Your other choice is to hit the lucky lotto numbers, and the odds there just aren’t that good.

Warren Buffett, arguably the foremost trader of all time, suggests a couple of quite simple guidelines for investment. The first principle goes:”don’t lose money”. The other law goes: “do not forget the first rule”. Basic yet still deep. If you’re operating in ETF trend trading, it really is essential to seek out all the small factors which give you a tiny start. After all, you barely need 10 minutes of profitable dealing each day to have a wonderful little bank balance.

Tip #1.

Knowing the significance of drawdowns. The importance of handling your dealing lot capacities as well as your money and the best techniques for establishing stop losses can’t be overemphasized. If you adhere to the rules of Warren Buffett, risk minimization is definitely the very first step towards not losing money. Plenty of people do not completely understand the significance of big drawdowns and the tremendous effort required to make up. In the event that there is a portfolio with a account balance of $30,000 along with $18,000 worth of drawdowns, the actual drawdowns add up to 40 percent of the initial buying and selling cash. Should you discuss with a novice investor just how much he would need to earn to make up the first total, he would in all probability state 40 percent. He’s forgetting that he’s starting from a reduced foundation and will actually need to make 66.67 %. The bigger the drawdown, the greater the work that is required. At 50 percent drawdown, the amount becomes 100 % and from 90 percent drawdown, it approaches 900 %.

Tip #2.

Continuing the above, if perhaps you limit the investment within any one location to 2%, despite ten bad transactions, the drawdown will just end up being twenty percent which isn’t too problematic to make up. Lots of investment courses advocate an expenditure of 5–10% and yet just as we have seen, a sequence of loss deals can leave you with a real struggle to regain your original trading situation. Setting up incorrect stop losses may exacerbate the position as technically indicated stop losses may well make you vulnerable to expensive losses. The simplest way to create a stop loss is to blend the technical position with a limitation on outlay. As an example, the technically suggested stop loss might end up being a value of $100 although this may make you vulnerable to the chance of a 3-% deficit. To scale this decrease down to 2 %, you basically cut down the size of your deal. You might argue that you’re restricting gains yet far more significantly, you are shielding yourself against undesirable damage.

Tip #3.

Enter into deals at lower-risk, high-profit potential price points. For example, you may opt to invest with a price-pullback if technical indicators suggest that there’s a good possibility that the ETF trends will continue in the initial direction. It would probably be much better if you are able to get multiple confirmations that the area you choose is going to hold. Take advantage of signs, shifting averages and Fibonacci retracements.

Tip #4.

Under no circumstances attempt to make deals at the very topmost or bottom level of market trends. Though you’ll find a lot of technical signals that may signal trend reversals, this strategy offers too much associated risk. Wait till a trend reversal is actually strongly established before doing a deal.

Tip #5.

Know the moment to do nothing at all. Overtrading is the ruin of a lot of dealers that believe that the quantity of investments is directly proportional to the profits that can be made. For instance, it isn’t a great idea to deal whenever amounts are lower and price ranges are shifting sideways. Remember that one particular very good solid deal is really worth a dozen fragile indecisive trades.

Most traders know the value of implementing trading systems but not all of them recognize the importance of back testing. If you’ve only just begun dabbling in market investments, this is one of the many considerations that you should focus on right away. You just can’t make considerable profits without it.

If you’ve only just heard of it, you may not immediately be able to guess what it is all about. It is nonetheless, easy enough to comprehend. To test a system, all you need to do is to take your system and use a piece of software to run it across a set of historical data. You will be able to see how the system will perform.

It should be obvious how and why back tests are a must before adopting trading systems. Through testing, traders can tell if an existing plan has a good chance of functioning well in a market. Simply put, there is some warning in advance if a system can produce profits or not. This is a conclusion that you can arrive at even if a tester only works with historical information. The logic behind the procedure is that historical data might possibly repeat itself at a future date. Even if an exact repeat is impossible, similar situations can still occur.

There’s more than just a single shot at profitability at stake here. A truly scientific test can also help determine if a system can consistently perform well in future trades. Moreover, it can also help supply the necessary information that you would need to improve or complete your plan. A test for example can help you decide on how and where to allocate your resources.

The technical benefits of back testing are clear. Bear in mind though that there are also intangible benefits that you can gain from it. The most important advantage of the process is that it solidifies a trader’s confidence in his system. Being confident is crucial because without this feeling, you will forever be tempted to abandon or arbitrarily and constantly modify your plan even if it might potentially yield some profitable and sustainable results. In effect, you will be trading as if you had no clear plan at all.

In short, a systematic and comprehensive test has a lasting impact on trading psychology. Once you’ve finished pushing your plan through a series of back tests, you will cease to be afraid of your decisions. Because you know that your plan works, you never have to hold on too long or let go too early of your trade positions.

Charting packages typically have their own testing tools or software. Many of these however fail to deliver the best results. Some testing tools in packages for example implement tests on individual assets, taking one security and the total capital across the procedure. This is hardly a reflection of actual trading situations because many traders have portfolios of securities. A good testing facility should be able to consider multiple securities in one test run.

There is no chance that you can go astray with back testing especially if you opt to download Metastock software. You’ll definitely see more profits with a testing tool but only if it is a good one. Take the time to choose the right tool.

Hardly any trader will argue over the advisability of using trading systems. Not all trading experts however will suggest back testing. They may have just forgotten to mention it or they might not think it overly important to mention as a sole topic. Neophytes should realize though that along with systems, testing is a very vital trading component.

If you’ve only just heard of it, you may not immediately be able to guess what it is all about. It is nonetheless, easy enough to comprehend. To test a system, all you need to do is to take your system and use a piece of software to run it across a set of historical data. You will be able to see how the system will perform.

Obviously, back tests are advantageous for several reasons. One main benefit to it is that traders are given a direct idea of whether a system is likely to give profitable results or not. The potential profitability of a trading system is a clear point of interest for traders mainly because there is no point in adopting a system that is likely to fail. Despite the fact that only historical data is involved, you can still effectively test a system. The situations that have unfolded in the past in the markets will probably have future parallel occurrences.

This isn’t just all about making good profits once. A systematic and scientific back test can offer some insight on the possible future consistency of a trading system. Furthermore, you can also efficiently gather data on what needs to be improved in your plan. A good example is the process of allocating capital. Testing can give you a clear guide on how and where chunks of your capital should be placed.

It should be obvious now why back testing is vital. Be mindful though that there is more to it than visible benefits. The most crucial benefit of all is not even tangible. It is only through proper testing that a trader can become confident in a plan. A plan that passes testing becomes easier to believe in. Furthermore, confidence is necessary because it prevents traders from leaping from one system to another in the hopes of catching the magic formula. This is not just unsystematic. It is also foolish.

In other words, a scientific test has a solid and clear effect on a trader’s inner psychology. It is only after you’ve pushed your plan through back tests that you can say beyond a shadow of a doubt that you can use a system to make the appropriate decisions. You know your plan works so there’s no reason not to use it.

You can test your chosen system using the software included in your charting package. In some cases though, these testers just aren’t good enough. A typically ineffective tool takes a system through securities individually. This doesn’t just render slow results. It also leads to inaccurate conclusions simply because securities aren’t treated as part of a portfolio. An ideal procedure should be able to take into account the interrelatedness of a portfolio of securities.

There is no doubt that back testing is necessary especially if you decide to download the Metastock software. If you want profits to keep on coming, you need to consider tackling this first. Pick a testing tool that has a proven and effective track record.

Most traders know the value of implementing trading systems but not all of them recognize the importance of back testing. If you’ve only just begun dabbling in market investments, this is one of the many considerations that you should focus on right away. You just can’t make considerable profits without it.

If you’ve only just heard of it, you may not immediately be able to guess what it is all about. It is nonetheless, easy enough to comprehend. To test a system, all you need to do is to take your system and use a piece of software to run it across a set of historical data. You will be able to see how the system will perform.

It should be obvious how and why back tests are a must before adopting trading systems. Through testing, traders can tell if an existing plan has a good chance of functioning well in a market. Simply put, there is some warning in advance if a system can produce profits or not. This is a conclusion that you can arrive at even if a tester only works with historical information. The logic behind the procedure is that historical data might possibly repeat itself at a future date. Even if an exact repeat is impossible, similar situations can still occur.

This isn’t just all about making good profits once. A systematic and scientific back test can offer some insight on the possible future consistency of a trading system. Furthermore, you can also efficiently gather data on what needs to be improved in your plan. A good example is the process of allocating capital. Testing can give you a clear guide on how and where chunks of your capital should be placed.

It should be obvious now why back testing is vital. Be mindful though that there is more to it than visible benefits. The most crucial benefit of all is not even tangible. It is only through proper testing that a trader can become confident in a plan. A plan that passes testing becomes easier to believe in. Furthermore, confidence is necessary because it prevents traders from leaping from one system to another in the hopes of catching the magic formula. This is not just unsystematic. It is also foolish.

In short, a systematic and comprehensive test has a lasting impact on trading psychology. Once you’ve finished pushing your plan through a series of back tests, you will cease to be afraid of your decisions. Because you know that your plan works, you never have to hold on too long or let go too early of your trade positions.

You can test your chosen system using the software included in your charting package. In some cases though, these testers just aren’t good enough. A typically ineffective tool takes a system through securities individually. This doesn’t just render slow results. It also leads to inaccurate conclusions simply because securities aren’t treated as part of a portfolio. An ideal procedure should be able to take into account the interrelatedness of a portfolio of securities.

There is no chance that you can go astray with back testing especially if you opt to download Metastock software. You’ll definitely see more profits with a testing tool but only if it is a good one. Take the time to choose the right tool.

There’s no doubt that the idea starts off from back when all of us are youngsters. You were either right or wrong. Everyone kept scores based on how often we were right. The more frequently you had been right, the more effective off you had been. All of us resented being incorrect – even steering clear of it totally. Sad to say, far too most of us take that exact thought in our investing mindset – and this costs you money.

How frequently are you setting a buy order, and imagining what an impressive trader you happen to be for choosing the correct investment. I bet one of the metrics regarding ranking a certain online stock trading newsletter is on how a good deal of their particular suggestions made money. When you sign up for a service providing you with buy and sell opinions, I bet one of the determining reasons regarding whether or not you would subscribe once more isn’t just the entire profit, but the winning %.

Are you willing to spend good money for any system which was right 10% of the time? What about one that’s right 35% of the time?

We realized from an early age that appearing wrong is, well, wrong. Therefore all of us steer clear of it at any cost. How often have you tried to convince your self that its not a loss till you place the sell request? And that means you hang on waiting around to be proven correct, and then watch the investment move perhaps lower. You know that you do not want a 20% loser in your investing journal… and that means you hold on even more… at 45% you finally sell and trust no one will be watching.

We enjoy being right, we hate being wrong. In the stock game, it does not matter who’s right and who is wrong. It only counts how much cash you’ve got left by the end of the day. Whether you are trading stocks for a living, or simply trying to put a little extra cash away for your golden years, its all about capital preservation.

The well known Turtles had many losers along with a horrible winning % record for their particular trading style. In spite of this, they kept their losers to a minimum and let their winners run. Sometimes, it had become 1 or 2 investments which made all the difference in their stock portfolio.

The truly amazing Ted Williams hit .406 in 1941 – he didn’t get on base 60% of the time, however, he’s regarded as among the best players in baseball – ever. If the player today hits more than .300, thats being wrong about 70% of the time – they can be finding a huge bump in their incentive pay.

You also may be wrong 7 out of 10 times of the time and nevertheless make a killing in the wall street game.

It is all about taking the losses at the correct time. If you use position sizing, you’ll instantly reduce just how much you are going to lose per trade. Stay with a Chandelier stop and you will make certain your initial risk will be the highest you are going to take.

Another thing to note. When you’re holding on to a huge losing position – that’s money you cannot utilize to acquire an additional position that is the one that makes a big in your stock portfolio.

It doesn’t matter for anyone who is trading in penny stocks or big blue chips, you’ll want to manage risk if you want to remain in the stock trading game.

There are 3 basic legs to trading: Psychological Factors, Risk Management and The Trading Strategy. Below are some day trading rules that bear repeating.

Anyone’s mental attitude plays a big part in day trading. One needs congruity in one’s mind since the market is largely a random walk and you’re in the fight and need to be alert and ready to act reasonably. There are times the market does set up to give you an edge and you must be mentally prepared to take advantage of it.

One needs patience till the best setup develops and then pounce on it. One has to wait till the right moment and then act decisively.

It is a game of not making mistakes and keeping one’s losses to a minimum.  Discipline is paramount. These rules are the result of individual back testing and verified by the trader.

One always need to protect their capital with a stop market order so to keep risk at a minimum. If the risk is too great, pass on the trade. It’s imperative you use a trade simulator to test your system and learn the mechanics and gain experience.

One needs a calm environment to make non-emotional decisions in.  Having an emotionally neutral balance is vital when trading. Controlling ones emotions helps in order to bounce back quicker after losing trades. A solid confidence  can emerge when emotions are left out of the equation and past results show a positive capital increase.

Keeping a log or diary with details of the how and why is a must. One needs to hold oneself accountable. Make note of how you perceived the situation and what was on your mind. In retrospect, you’ll have a log you can refer to and self-diagnose.  You’ll get a birds-eye view of how the strategy is working.

One needs a clear plan and objective to back up against and to trade with. Trade with a set of rules that you can count on!  Keep a list of your day trade plans on index flash cards so you can review the strategy is if necessary before you make a trade. Back testing your theory  is vitally important. One needs to back test and have confidence oneself that the plan  is on target. Finding good day trader software may be helpful.

Money management rules need to be fixedly adhered to. Risk no more than 2% on any trade. Capital preservation is the number one rule and one doesn’t need risky temptations. One can lose around 50% of their trades and still make money with good disciplined money management policies. 

Day trading can be a very enjoyable career. If you are armed with a winning method, sound money management and have you emotions and psychology on an even keel, life can be rosy. Even a day trading stock tip may prove workable with the right system.

I believe it starts from when all of us had been children. You were either incorrect or correct. Everyone kept score based on how frequently we were wrong. The more you had been right, the better off you had been. We all hated remaining wrong – even keeping away from it at all costs. Unfortunately, way too a lot of us carry that exact thought in our investing mentality – and that costs you money.

How frequently do you find yourself placing a buy order, and believing what a remarkable investor you’re for choosing the right investment. I wager one of the metrics for ranking a specific online stock trading newsletter is how a good deal of their particular tips and hints produced a profit. When you sign up to something that provides buy and sell suggestions, I wager on the list of deciding reasons regarding whether or not you’ll subscribe again is not only the entire return on investment, but the winning %.

Would you spend good money for any program which was right 1/10 times? What about one that is correct 35% of the time?

We learned from a young age that being incorrect is incorrect. And so we all stay away from it at any cost. How often have you attempted to persuade your self that it’s not a loss until you put in the sell order? This means you hang on ready to be proven right, only to look at the stock move perhaps lower. You dont want a 20% loser on your trading journal… and that means you hold on more… at 45% you finally sell and trust no-one will be paying attention.

We all really enjoy being correct, we detest being incorrect. In the stock trading game, it does not matter who’s right and who is wrong. It matters the amount of money you will have remaining at the end of the particular year. You may be trading stocks for a living, or perhaps trying to put a little extra money away for your golden years, it’s about cash preservation.

The famed Turtles used to have a number of nonwinners and a terrible win / loss record for their particular trading style. However, they kept their losses to a minimum and let their winners run. Sometimes, it had been 1 or 2 stocks which made all the difference inside their portfolio.

The truly great Ted Williams hit .406 in 1941 – the guy did not get on base 60% of the time, yet, he is considered to be among the best players in the game – at any time. When a baseball player today hits more than .300, thats being wrong about 70% of the time – they should be finding a massive bump in their bonus.

You too can be wrong 70% of the time and nevertheless make a killing in the stock market.

It is about taking the losses at the right time. The use of position sizing, you will automatically reduce the total amount you are prepared to lose for every trade. Stick to a Chandelier stop and you will make sure your initial risk is the highest you are going to take.

Something diffrent to keep in mind. When you’re holding onto that big losing position – thats money you cannot utilize to acquire one more position that is the one which makes the difference in your stock portfolio.

It doesn’t make a difference if you are trading in penny stockspenny stocks or big blue chips, you’ll want to control risk if you want to keep in the game.

There are 3 basic legs to trading: Psychological Factors, Risk Management and The Trading Strategy. Below are some day trading rules that bear noting.

A large part of day trading is mental. One needs harmony in one’s mind since the market is largely a random walk you need to be alert and flexible. There are times the market does set up to give you an edge and you must be mentally prepared to take advantage of it.

One needs to be willing to endure till the correct develops and then put one’s order in. One has to wait till the right moment and then act without question.

This game requires one to limit their mistakes and minimize their losses.  You need to be disciplined and not violate any of your rules. These rules are the result of individual back testing and verified by the trader.

In order to avoid capital loss, always set stop orders on a position. Pass on the trade if the risk is too large. It’s imperative you use a trade simulator to test your system and learn the mechanics and gain experience.

Another big factor is not to be emotionally stressed by other circumstances while trading.  Having an emotionally neutral balance is vital when trading. Controlling ones emotions helps in order to bounce back speedier after losing trades. A solid assurance  can emerge when emotions are left out of the equation and past results show a positive capital increase.

Be sure you keep an active log of your trades for later reflection. This is a way to hold yourself accountable. You need to record how you felt and what you were thinking when you made the trade. What indicators you used and how the trade developed. This is a kind of biofeedback that allows you to talk to yourself rationally and can be referred to.  This allows you to see if your method is working or not.

One needs a clear method and objective to base their trading on and to trade with. Trade with a set of rules that you can know work!  Keep a list of your day trade plans on index flash cards so you can review the method is if necessary before you make a trade. Back testing your theory  is vitally important. One needs to back test and have confidence oneself that the theory  is on target. Finding good day trader software may be helpful.

A constant stick-to-it disciple must apply to your money management rules. Never risk more than 2% on any trade. Capital preservation is the number one rule and one doesn’t need risky temptations. Even if you lose 50% of your trades,  you can still make money with the right money management rules. 

One can live well-off day trading. Those who are successful have sound money management strategies, a winning theory and are emotionally well balanced. Even a day trading stock tip may prove workable with a good strategy.

I’m sure it all starts from back when all of us are youngsters. You are either incorrect or correct. We kept score based on how often we had been right. The more frequently you are correct, the more effective off you had been. We hated remaining incorrect – even steering clear of it at all costs. Sadly, way too many of us carry that exact notion in our own investing outlook – and that will cost you profits.

How often do you find yourself setting a buy order, and thinking about just what a great trader you are for picking the right investment. I bet one of your metrics for grading a given online stock trading newsletter is on how the majority of their particular tips and hints produced a profit. In the event you subscribe to a service to provide buy and sell recommendations, I bet one of the deciding reasons of whether you might sign up once again is not only the entire net profit, but also the number of times they were right.

Are you willing to spend good money for any system that’s correct 1/10 times? How about one that’s correct 35% of the time?

We all figured out from a young age that being wrong is wrong. And so we avoid it at any cost. How many times have you tried to convince yourself that its not a loss till you put in the actual sell request? So you hold on tight waiting around to be proven correct, only to watch the stock move even lower. You do not want a 20% loss against your trading log… and that means you hold on tight even more… at 40% you finally sell and trust no-one is watching.

We all take pleasure in being right, we detest being wrong. With the stock market, it does not matter who’s going to be correct and who will be incorrect. It only matters how much money you’ve left at the end of the month. Regardless if you are trading stocks for a living, or just attempting to set a little extra money away for retirement, its all about investment preservation.

The well-known Turtles once had a number of nonwinners plus a horrible win/loss record for their investing style. Still, they kept their losing positions to a minimum and let their winners run. Many times, it had become one or two positions that made a big difference in their stock portfolio.

The truly amazing Ted Williams hit .406 in 1941 – the guy did not get on base 60% of the time, yet, he’s regarded as one of the best hitters in baseball – at any time. If the player today hits over .300, that is being wrong about 70% of the time – they will be seeing a massive increase in their incentive pay.

You also can be completely wrong 70% of the time and nevertheless make a killing in the stock trading game.

It’s about taking the losses at the correct time. If you use position sizing, you’ll immediately lower the amount you are prepared to lose for every trade. Stick to a Chandelier stop and you’ll ensure the initial risk is the maximum you’ll take.

Something else to keep in mind. When you’re holding on to that big losing position – that’s money you cannot use to acquire another position that may be the one that makes the difference in your stock portfolio.

It does not matter should you be investing in penny stockspenny stocks or big blue chips, you must manage risk if you want to stay in the game.