There are many books and courses on investment strategies, but few are suitable for a beginner who wants to progress to an intermediate level. This article will tell you in nine steps how to get to the next level.
Steps
Step 1. Choose which markets to invest in (eg stocks, bonds, options, futures, forex)
A big mistake that beginners make is wanting to invest in everything. Fight this temptation, focus. Don't be distracting, specialize.
While it may be imprudent in any type of investment to try to develop the level of experience necessary to predict and profit from price fluctuations in the short term, it is prudent to reduce the risk of your portfolio by diversifying your investments. For example, if you specialize in bond trading, you could also buy and hold shares of investment funds with a large stock base, in case that market sector performs better
Step 2. Choose the timing for your trades
Daily (entry and exit on the same day), medium (duration of 2-5 days), or longer (5-20 days).
Step 3. If you trade on an hourly basis, look at the charts on a daily basis to get an idea of the trend that is developing
If you trade on a daily basis, look at the weekly charts. If the daily chart gives you a buy signal, but the weekly chart gives you a sell one, don't pay attention to the daily chart.
Step 4. Observe the markets
You will be amazed at how much you can learn from watching financial news and reports.
Step 5. Keep a record of your trades
Start making notes, ideas and observations before making investments.
Step 6. Find or develop an investment strategy
You will need a plan to succeed in the markets, be it yours or someone else's. This strategy should suit your investing style and temperament. You could start applying the principles of fundamental analysis and study technical analysis. Take the one that makes the most sense to you from several sources.
Step 7. Invest while avoiding risk
Start by practicing with test accounts. This will make you understand the most common mistakes and help you learn the basics. Try the services that allow you to practice fake money before you start investing real money.
Step 8. Start small
After practicing, start investing in small steps. You should play negligible figures. For example, in stocks, do not reserve more than 20% of your capital for an investment. Make sure you can always afford to lose what you are playing. If you use an account with a safety margin, do not invest everything to avoid having your positions closed in the event of a loss.
Step 9. Multiply your investments
Once you achieve success with small investments, instead of diversifying your purchases, increase the number of shares you own.
Step 10. Manage your risk
Make sure you always have an option to exit a position in case of sudden losses.
Step 11. Know when to invest
It is not always necessary to have open positions. Cash is also a position.
Advice
- If you decide to acquire a diversified portfolio of 10 stocks (an idea promoted in many investment guides), you will need to hold the stocks that go up and sell those that go down. It seems strange to sell at a loss, but if the trend is to go down, your portfolio's value will also go down. A friend of mine sold 9 out of 10 shares with a 30% gain and bought more shares. By not selling the shares at a loss, his portfolio lost half of its value. This is because he ended up having 10 stocks with a downtrend.
- Playing the stock market is not a speed race, it is a marathon. Do not take risky actions, play little by little and learn.
- Don't trade because you are bored. Sometimes the best thing is to do nothing.
- At the close of each trading session, record your investments, your feelings and your thoughts. Your diary is your best teacher.
- You always need to know when to get in and out of a deal.
- Use technology to automate and simplify your investments.
