Investing and Trading Style
I started investing in individual stocks when I was in high school after a traveling special opportunity class that stopped at my school gave me information on finance and accounting and introduced me to the stock market. I have been dabbling in trading and investing ever since then and have done fairly well, though my risk tolerance is high, which has helped me find a few big winners to skew my numbers well beyond the normal returns.
One thing I have often found true is that when it comes to “trading”, momentum is your friend. The stocks that have done well will usually continue to do well in the short term. This makes for good day and swing trading opportunities, though I do far less trading than I used to. While momentum trading is not fool proof and there are always risks, day trading based on technical and charts has shown to be less successful, and many people have fallen into the day trading trap thinking they have the systems in place and know what will happen, but sadly, around 9 out of 10 end up making little to no money (or losing money) and give up (I found a few places on line that were around 90% failure rate, though I cannot attest to that being verifiably true). Given the large amount of work it is to research, monitor, trade and repeat (as well as the high stress), most people give up and just do long term investing.
When it comes to long term investing, time value of money and compounding make all the difference. I am sure most people here are familiar with these finance concepts so I will not go on further about this, but simply holding and being long biased is the way you will most likely be successful in the capital markets. If you are interested in doing some market timing to try and enhance returns, I have found is that you should often go against the crowd, or be a “contrarian”. When everyone is saying buy, that is when you should look at trimming a position. When everyone says sell and things look grim, that is when you should be adding to or building on your position. While there are many factors in whether a particular stock/industry goes up or down, the main one is the supply and demand, and the crowd being on one side pushing up or down will allow you a good entry or exit point on the flip side of them. Once things normalize, you should be happy with your trim or purchase.
Of course, with the rising popularity of index and passive investing, most individual stocks largely go up or down following that particular industry/peers, so stock picking is not what it once was as the company to company variances are not as extreme. This has led to the underperformance of many active managers and hedge funds, as they have higher fee structures and have a hard time generating returns above the benchmarks they are pitted against.
Overall, there is no fool proof way to make money investing, but sticking to long term investing and keeping any day/swing trading to a momentum basis will likely produce results that will outperform most strategies, in my opinion and based on my experience.
Would love to hear others’ thoughts and insights on this as well!
Take care my friends,
Brian
Disclaimer: This article contains my opinions and thoughts but should not be used as investment advice. I am not a trained investment professional. Always do your own due diligence and make your own investment decisions.
Image courtesy of Pixabay.
Sitat:
When everyone is saying buy, that is when you should look at trimming a position. When everyone says sell and things look grim, that is when you should be adding to or building on your position.
I like what you write here @brian.rrr
And I would say that it can be used in the krypto currency market as well
I agree my friend, and I always appreciate when you stop by!
Informative post , thank you . Nice photo shoot . Keep good work .
Your post is always different i follow your blog everytime , your post is so helpful . I always inspire of your post on my steem work . Thank you for sharing @brian.rrr
Thanks for sharing your insights, Brian.
You asked for opinions. There's no shortage of those, are there?
There are many factors involved in how one approaches this. One's tolerance, goals, understanding, etc., are all factors.
For the trader, technical analysis is a must. Being able to discern the mood of the market is very difficult, with few learning to do it well. Learning to trade based on that information is even more elusive.
But, yeah, for the investor, finding the winners can be quite different. Still, one of the toughest skills is learning when to exit.
Here's our new Discord channel invite, so you can join us there.
An amazing and useful topic thank you for sharing @brian
i think that,this is a very valuable post for all steemians.because i have no idea of trading matter. but some idea of investment.i hope that,your good advice apply my steemit work obviously i improved my work and very early success in the future. ur investing experience helps us to aquire some great idea about investing and trading.again spd prize reach to low position.i wish that,this situation very quickly changed being and spd prize reach to top one number in the future..very well done..my dear friend... @brian.rrr thanks to sharing for your high thought quality knowledge post..best of luck of your great work. take care yourself and your child jacob,s
I would like to trade more but the tax penalties are forcing me to hodl, probably for the best.
I've never had much luck because I don't stick with a strategy long enough. I am in steem for the long haul and never powered down any sp. But I did buy 50 steem to learn and trade with. The idea was that I would learn to swing trade with this amount. So far I have made 2 trades just to get the hang of it. The results so far are minimal and I have chosen the trade timing incorrectly. It makes me think that long term investing is right for me but I want to keep at it with the 50 steem and see if I can learn how to do it better.
I would add that to be a contrarian, you also have to have the temperament for it. It's easy to say to trim your positions just when a stock has just done spectacularly well, but very few manage to actually sell. The greed emotion often kicks in and many investors are tempted to buy more instead of trimming or selling the position. This is also true for the reverse.
First time I've seen you give investment advice.
Personally I have zero experience with trading, but I will remember your words.
They might come in handy someday
I do not have much knowledge in the subject my friend @brian.rrr what I have read or how little I have learned is thanks to the publications that you usually do in finance, you have the stock exchange and you have places where you can invest here in my country I think that there is not that culture so very few know about the subject