Saturday, 14 November 2020
Quote for the day
"Once you realize that you have identified a passion, invest in yourself. Figure out what you need to know, what kind of experience and expertise you need to develop to do the things that you feel in your heart you will enjoy and that will sustain you both mentally and economically." - Martha Stewart
Friday, 13 November 2020
Five habits of the very best investors
Most investors spend most of their time and energy thinking about what they can get from their investments. That makes perfect sense.
But there's more than that to investment success.
A few investors are lucky enough to be successful primarily because they were born into wealth and abundance. But the vast majority of us have to rely on hard work and … what else?
If you can put your finger on that elusive "what else" factor that leads to success, you can change your life — and your family's life — for the better. So what is it?
As I researched my 2011 book "Financial Fitness Forever," I posed exactly that question in a series of extended interviews with nine seasoned investment advisers I respect and admire.
One thing that emerged was deceptively simple. Aristotle said it this way: "We are what we repeatedly do. Excellence comes not from our actions but from our habits."
Again and again these nine advisers identified some key habits that seemed to be ingrained in the most successful people among the thousands of clients they have worked with. Pretty soon we realized that successful investors' most effective "secrets of success" were neither secret nor mysterious.
If I had to boil down what we found to just one sentence, I would say that the "perfect investor," if such a person really exists, is somebody who plans for the future and is patient and deliberate in carrying out those plans.
I could boil it down to three words: Planning, perspective and patience.
Or just two words: Good habits.
Habits govern our behavior in the background and let us move through life without requiring us to think about the same issue again and again.
Here are five habits that can help you be a better investor:
1: Setting goals
Successful investors know where they are going and set goals for getting there. Investors who lack clearly articulated and measurable goals tend to dabble in various investment options, hoping they'll find something that works.
But once you set some fixed goals, your investment choices and actions acquire an entirely new meaning. Like a casual traveler who has been handed a road map and a destination, you can suddenly know what you should do.
2: Create a plan — and stick to it
Successful investors make concrete plans to achieve their goals, and then follow the plans. They periodically re-examine those goals, too. In real life, our needs change, circumstances change, knowledge evolves. Rethinking your goals and working to achieve them can become a regular part of your life. I recommend you make this a once-a-year habit.
3: Save regularly
Successful investors save regularly and routinely. In my roundtable discussions among advisers, this was the very first trait that emerged. Every adviser I talked to agreed that this is an absolutely essential ingredient for successful investing. After all, you can't invest money unless you have it; and unless you save it, you probably won't have it.
The best investors find ways to add to their savings automatically. These days, that is pretty easy through payroll deductions and regularly scheduled online transfers. If you want to be among the best, set this habit on automatic.
4: Live on less
Successful investors habitually delay gratification and live below their means. This, of course, is essential to save money. If you know from experience that you can live on less when you need to, then you've laid an important piece of groundwork for a successful retirement.
Some very successful investors take pleasure in demonstrating that they can live on less and still be happy. They're among the people who are most likely to enjoy retirement, since they have deliberately cut the emotional cord between how much money they spend and how happy they are.
5: Stay in the game
Successful investors expect setbacks and stay in the game anyway. I remember opening a retirement account some years back for a woman who had inherited some money. I did my best to let this woman know that she would experience some temporary losses along the way, and she assured me that she was fine with that idea.
A month later, she closed her account after losing about 1% of her portfolio.
I called her, and she told me she remembered my promise that she would experience temporary losses along the way. And she remembered her promise to stick with it when that happened.
"Then why are you closing your account after only a month?" I asked. I've never forgotten her reply: "I thought that we would make some money first before I lost it."
Had this woman remained invested, her portfolio would have gone up nearly 10% in the following eight months. But by quitting prematurely, she locked in her loss and gave up a perfectly sensible game plan.
Is this a habit? I think it is. The best investors are those who can habitually stay the course despite the setbacks they inevitably encounter. This is resilience — another very valuable trait — in action.
Doing all these things may seem like a pretty tough assignment, and in a way it is. If you want to be outstandingly successful, you've got to do what most other people don't do.
The good news is that your habits are within your control.
Here's one piece of parting advice: Don't expect perfection, either from yourself or from the world. We are only humans living in an imperfect world. I haven't lived my life perfectly, and you won't live yours perfectly. What you know, what you expect and what you do will sometimes let you down.
But if you do your best and keep putting yourself back in the game, you'll be the best investor that you can be. That's a good habit to nurture.
Source:www.marketwatch.com
But there's more than that to investment success.
A few investors are lucky enough to be successful primarily because they were born into wealth and abundance. But the vast majority of us have to rely on hard work and … what else?
If you can put your finger on that elusive "what else" factor that leads to success, you can change your life — and your family's life — for the better. So what is it?
As I researched my 2011 book "Financial Fitness Forever," I posed exactly that question in a series of extended interviews with nine seasoned investment advisers I respect and admire.
One thing that emerged was deceptively simple. Aristotle said it this way: "We are what we repeatedly do. Excellence comes not from our actions but from our habits."
Again and again these nine advisers identified some key habits that seemed to be ingrained in the most successful people among the thousands of clients they have worked with. Pretty soon we realized that successful investors' most effective "secrets of success" were neither secret nor mysterious.
If I had to boil down what we found to just one sentence, I would say that the "perfect investor," if such a person really exists, is somebody who plans for the future and is patient and deliberate in carrying out those plans.
I could boil it down to three words: Planning, perspective and patience.
Or just two words: Good habits.
Habits govern our behavior in the background and let us move through life without requiring us to think about the same issue again and again.
Here are five habits that can help you be a better investor:
1: Setting goals
Successful investors know where they are going and set goals for getting there. Investors who lack clearly articulated and measurable goals tend to dabble in various investment options, hoping they'll find something that works.
But once you set some fixed goals, your investment choices and actions acquire an entirely new meaning. Like a casual traveler who has been handed a road map and a destination, you can suddenly know what you should do.
2: Create a plan — and stick to it
Successful investors make concrete plans to achieve their goals, and then follow the plans. They periodically re-examine those goals, too. In real life, our needs change, circumstances change, knowledge evolves. Rethinking your goals and working to achieve them can become a regular part of your life. I recommend you make this a once-a-year habit.
3: Save regularly
Successful investors save regularly and routinely. In my roundtable discussions among advisers, this was the very first trait that emerged. Every adviser I talked to agreed that this is an absolutely essential ingredient for successful investing. After all, you can't invest money unless you have it; and unless you save it, you probably won't have it.
The best investors find ways to add to their savings automatically. These days, that is pretty easy through payroll deductions and regularly scheduled online transfers. If you want to be among the best, set this habit on automatic.
4: Live on less
Successful investors habitually delay gratification and live below their means. This, of course, is essential to save money. If you know from experience that you can live on less when you need to, then you've laid an important piece of groundwork for a successful retirement.
Some very successful investors take pleasure in demonstrating that they can live on less and still be happy. They're among the people who are most likely to enjoy retirement, since they have deliberately cut the emotional cord between how much money they spend and how happy they are.
5: Stay in the game
Successful investors expect setbacks and stay in the game anyway. I remember opening a retirement account some years back for a woman who had inherited some money. I did my best to let this woman know that she would experience some temporary losses along the way, and she assured me that she was fine with that idea.
A month later, she closed her account after losing about 1% of her portfolio.
I called her, and she told me she remembered my promise that she would experience temporary losses along the way. And she remembered her promise to stick with it when that happened.
"Then why are you closing your account after only a month?" I asked. I've never forgotten her reply: "I thought that we would make some money first before I lost it."
Had this woman remained invested, her portfolio would have gone up nearly 10% in the following eight months. But by quitting prematurely, she locked in her loss and gave up a perfectly sensible game plan.
Is this a habit? I think it is. The best investors are those who can habitually stay the course despite the setbacks they inevitably encounter. This is resilience — another very valuable trait — in action.
Doing all these things may seem like a pretty tough assignment, and in a way it is. If you want to be outstandingly successful, you've got to do what most other people don't do.
The good news is that your habits are within your control.
Here's one piece of parting advice: Don't expect perfection, either from yourself or from the world. We are only humans living in an imperfect world. I haven't lived my life perfectly, and you won't live yours perfectly. What you know, what you expect and what you do will sometimes let you down.
But if you do your best and keep putting yourself back in the game, you'll be the best investor that you can be. That's a good habit to nurture.
Source:www.marketwatch.com
Quote for the day
"Half our mistakes in life arise from feeling where we ought to think, and thinking where we ought to feel." - John Churton Collins
Thursday, 12 November 2020
7 Habits Of Highly Destructive Traders
As traders, we try to do constructive things that build faith in ourselves, and confidence in our trading systems. We want to stay on the right path and not wander into the wilderness of destruction. Here are the seven things that we must be cautious of for the sake of profitability.
3. Trade first and learn how to trade later. Traders who don’t spend time educating themselves before trading will learn the hard way, and give their trading capital to other traders as tuition.
4. Focusing on ego and the desire to be right, instead of profitability and big losses, will quickly destroy a trader’s account.
5. Traders that fight the trend and disagree with the actual price action will give their trading capital to those that follow the trend.
6. Trade without discipline and risk management and a trader will be destroyed regardless of their trading system or method.
7. If a trader doesn't diversify their life with strong relationships, fun, peace, and health, their trading results become too entangled with their self worth. This can lead to mental and emotional ruin.
The path to profitability leads away from these seven habits. In the end, traders are consistently rewarded for their good habits, and punished financially for their destructive habits. This is our stop list.
1. Blaming outside forces for poor trading results is an incredibly destructive behavior. High frequency traders, market makers, and irrational markets, give an undisciplined trader license to make reckless trades. The less responsibility taken for results, the more destructive they can be with an account.
2. Trading with no plan and making decisions based on feelings, is a really bad idea. Letting opinions and predictions be a guide to entries, and emotions be a guide to exits, guarantees maximum destruction of trading capital.
3. Trade first and learn how to trade later. Traders who don’t spend time educating themselves before trading will learn the hard way, and give their trading capital to other traders as tuition.
4. Focusing on ego and the desire to be right, instead of profitability and big losses, will quickly destroy a trader’s account.
5. Traders that fight the trend and disagree with the actual price action will give their trading capital to those that follow the trend.
6. Trade without discipline and risk management and a trader will be destroyed regardless of their trading system or method.
7. If a trader doesn't diversify their life with strong relationships, fun, peace, and health, their trading results become too entangled with their self worth. This can lead to mental and emotional ruin.
The path to profitability leads away from these seven habits. In the end, traders are consistently rewarded for their good habits, and punished financially for their destructive habits. This is our stop list.
Source: http://newtraderu.com/
Quote for the day
"Three grand essentials to happiness in this life are something to do, something to love, and something to hope for." - Joseph Addison
Wednesday, 11 November 2020
The 5 Holy Grails of Trading
By Steve Burns
“The Holy Grail is not what you would expect it to be. It is something that is different for each person. It’s a hidden secret you have to discover for yourself but it is obvious once it is realized.” - David Mobley, Sr.
Most new traders go on a quest for “The Holy Grail” of trading. They want the can’t lose system that prints money. Many believe that rich traders know the secret and keep it to themselves. The secret is that there is no “secret” system or methodology that always wins. There are many robust systems, but no 100% winning system, not even close. The big secret is that many of the best traders in the world have about a 50% win rate, and many of the best systems have around a 50% win rate (or less) with each entry.
Winning traders do have helpful secrets, but many new traders argue about these principles are difficult or don’t work, despite the fact that they come from seasoned and experienced professionals.
Most new traders go on a quest for “The Holy Grail” of trading. They want the can’t lose system that prints money. Many believe that rich traders know the secret and keep it to themselves. The secret is that there is no “secret” system or methodology that always wins. There are many robust systems, but no 100% winning system, not even close. The big secret is that many of the best traders in the world have about a 50% win rate, and many of the best systems have around a 50% win rate (or less) with each entry.
Winning traders do have helpful secrets, but many new traders argue about these principles are difficult or don’t work, despite the fact that they come from seasoned and experienced professionals.
Here are five real Holy Grails; they aren’t the answer alone, but put all five together and they can make a significant difference in a trader’s career.
- Big wins and small losses. With a 3:1 risk/reward ratio you can be a winning trader with a 33% win rate.
- Never lose more than 1% of your total trading capital in a single trade. This brings your risk of ruin down to almost zero, and turns the volume of your emotions down to a manageable level. This risk management rule causes a trader to be disciplined in their position sizing and stop loss placement.
- A trader must follow a robust mechanical system or trade with a rule based methodology that gives them an edge. You have to trade with a long term winning strategy and understand why it wins.
- Disciplined traders are the ones that eventually make the money and keep it, because they are able to take their entries and exits without being blocked by their egos or emotions.
- Traders don’t survive without perseverance. If one thing is the “The Holy Grail” of trading it’s perseverance. All the legendary traders decided they were going to be traders. They did what they had to do to be successful in the business. They put in the time and paid the price to win.
Quote for the day
"The stock market really isn't a gamble, as long as you pick good companies that you think will do well, and not just because of the stock price." - Peter Lynch
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