Separate yourself from the herd, know your edge, trade against the masses ... there are countless sayings, but the reality is that if you're doing what most investors are doing, you are likely losing money. The idea is not to always swim against the tide, but if 80% to 90% of investors lose money, then to be successful you need to be in the minority.
How do you differentiate yourself as a trader? Here are a few suggestions.
- Treat trading like your job, and if you do it part time, expect mediocre results. If you do not have the time, hire a professional who does.
- Spend more time on analysis than you do on planning your next family vacation.
- Constantly educate yourself the way you stoke a fire -- keep throwing logs on the fire in order to achieve the best results.
- Once investing becomes an expensive hobby, find an alternative.
- Surround yourself with smarter, more successful investors, and learn from them.
- Don't be afraid to ask questions and get clarification to make informed decisions.
- When choosing allocations, entering a trade or even cutting losses, always be prepared for the worst-case scenario.
- Be more concerned with the risk than with the potential reward.
- Evolve as the market circumstances change -- buy-and-hold was your father's stocks market.
- Admit when you're wrong ... some of the world's most successful investors are wrong 50% of the time.
- Do not define your success by a win-loss record but rather by how you manage the risks and your net returns.
- The easy part is entering the market ...the toughest part is managing the trade once you're in.
- Those who swing for the fence strike out the most ... frequent base hits will get you on the scoreboard.