3 Helpful Tips To Give You An Edge In This Market
Investing in the stock market is one of the hardest ways to make easy money.
It can be an emotional roller coaster ride. One day you might think you have it figured out, only to be humbled by the market the next day. But that’s the beauty of the market. Nobody ever “figures” it out, per se. It’s a constant learning process.
However, there are some things that you can do to gain an edge. Here are three tips I’ve learned from my years of investing that can separate a successful investor from the rest of the pack…
3 Tips For Successful Trading
1. First, put together a plan. You probably wouldn’t drive across the country without a map or GPS, so why would you risk your hard-earned money without a roadmap?
That’s precisely one of the advantages to having a system in place — it helps map out your trade, ideally with its clear buy and sell signals. But even if you don’t have a well-defined system at your fingertips, you should be sure to have a good idea of the amount of risk you’re taking (position size), your pain point (stop-loss, or exit price), and what you are looking to get out of the trade. Establish target prices that you would like to see your stock hit and pass through to help confirm your analysis.
Finally, when you create a plan, make sure to stick to it. That is the most difficult part for most investors. Learning the rules of investing is the easy part. Applying those rules and sticking to them is the hard part. Emotions tend to get in the way.
2. Another tip to give you an edge — and maintain your sanity — is to not watch every little movement. Unless you’re a day trader, there’s no reason to perseverate over every price tick. Of course, I’m not saying you should forget it altogether. But the more frequently you watch the stock, the greater the tendency is to overthink your trade, which could cause you to get out of a position too early.
This is a big reason why my Maximum Profit system uses weekly data when calculating one of the components of our buy/sell signals. I don’t want to be influenced by any aberrations that can surface on a daily basis.
3. My final suggestion is to think differently. We don’t want to be like every other investor. If you’re doing what everybody else is doing, you have no edge. You’re just following the crowd, succumbing to herd mentality.
I’ll give you an example. Most investors are looking to “buy low and sell high” — but that’s oftentimes the wrong approach. If you do that, you may find yourself waiting too long for a perfect setup — or worse, buying a dud that looked like a “value” stock simply because it was low.
Remember: we want to be thinking different from most investors. One way is to buy high and sell higher — a concept that goes against the grain. To understand what I mean, imagine seeing this chart, or showing it to a friend or colleague, and asking if this was a good time to buy…
This stock had been on a tear and was hitting new 52-week highs. One glance at this chart and most investors might think they missed the boat. That all the gains had been made. But the boat they missed was the one headed for more gains.
And that’s exactly where we bought over at Maximum Profit. And then we sold higher…
By buying high and selling higher we beat the broader market, as measured by the S&P 500, by more than 4-to-1.
Often, new highs create uncertainty among investors. We feel compelled to either take profits off the table or stay away from the stock altogether. But as my readers and I know that most stocks hitting new 52-week highs continue to go on to post even more 52-week highs. After all, the stock is hitting new highs for a reason…
Action To Take
By following these tips — having a plan, not getting caught up in the daily market noise, and thinking differently — you’ll have the edge you need to outperform most individual investors.
But these tips involve mindset — which is only half the battle. You also need to know what to buy, when to buy, what to sell, and when to sell.
Editor’s Note: Just days ago, Jimmy Butts sent his Maximum Profit subscribers an email that you NEED to see…
It’s all about the white-hot stealth rally taking place in the gold market right now — and more importantly, how to get in on the action.
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