Probabilities and money management are the keys to stock trading success
Do you too want to trade shares successfully?
If you are going to do it you need to do it properly or you will find your capital can quickly disappear. The main game for Stockradar, who has 14 years of successful recorded performance, is working with probabilities and money management.
Money management is another word for keeping your capital safe.
I know many of you have been thinking about taking a step back and spending less time ‘chart watching’. As well as running the Stockradar website my focus is helping members get their portfolios in order and this often entails a clean out of ‘deadwood’ and moving to a clean, process driven, automated, and time efficient approach. So if you’re looking for a fresh start in 2018 now is your opportunity.
Quality and control are the keys to growing your wealth
It’s the quality of what you hold that is important. It is always safer to be in cash earning a positive return than in declining equities. The returns on the conservative portfolio shown below support this approach. More is not necessarily better. The leverage of the Energiser portfolio offers superior returns but still uses the same process of strict money management.
Losing value is anathema to a good portfolio. When losses strike we have to cut them off at a predetermined amount and move on. If you don’t, inevitably you will end up with big drawdowns and then you have the dilemma of what to do with them. Often they end up in the bottom drawer – out of sight out of mind. This is not good investing.
Charlie Aitken (Aim Funds): ‘the difference between my life as a stockbroker and my new life as a fund manager is that now I limit my losses to 10%. As a stockbroker I (we) are not great at issuing sells. Now when a stock is at a loss I cut it and move on. We work our capital hard and that means cutting the non-performers and move on to new opportunities.’
As markets gyrate it would seem achieving consistent returns is hard to attain but through using a index unaware ‘constant price analysis’ process, it is easily achievable. Stockradar focuses on only high probability entries coupled with proper money management. This enables you to generate a consistently steady return from your investment in a safe environment.
Sometimes greed overwhelms us especially during good times when we want a little more and inevitably recklessness sets in while on the other hand during those tough times it is so important to keep your capital intact instead of trying to make money when the odds are stacked against you.
Trading and investing requires cool-headed navigation despite what the market throws at us.
The emotional control is also important even when you have a good trade plan because a trade plan has to be followed and not second-guessed.
The figures below show the current position of the Stockradar portfolio from the entire universe of 163 stocks we cover. The losses are kept small and short because we exit the losers quickly, no argument, and the winners show good percentage gains because our entries are high probability and our money management strategy allows us to hang on and stretch the winners.
Out of the 83 qualified stock picks from our universe of 163 as at the 18/12/17:
There are 68 winners
15 are showing losses
The average win is 20.7%
The average loss is 2.5%
If you are interested to find out more email Richard Lie at email@example.com
Or simply take a free two-week trial at Stockradar.com.au