The current financial trends have changed into investment and trading. It is no wonder that more applications come to the surface. Some new trading apps have even come with a financial education platform, such as IX Global, leading you to have better management of your finance.
With such rapid growth in online trading and investment, countless investors have diverted their money from high-end brokerage businesses into online trading and investment to manage their stock market on their own. Among all the best tips on online trading and investment, there are two secret principles. In this case, people can do well when keeping in mind those two excellent secrets of success related to investing in the stock market. The secrets are cutting losses early and sticking with winners as long as possible until they become endangered. This article will show you more about those two secrets and how to do it in online trading and investing.
Cutting Losses Early
Charles D. Ellis has tried to compare investing to tennis in his book. In this case, he observed that tennis specialists have attributes that many amateurs don’t have, such as exceptional speed, skill, athleticism, and hitting ability. The average amateur doesn’t win a match the way specialists do: by hitting great shots. Instead, they tend to win by simply not losing. In other words, anyone will win amateur tennis matches, and it is because their opponent is much worst.
Buying stocks has a fantastic thing in common. They often become their worst opponents because they often neglect the obvious thing to do. Many investors fall in love with a stock market when purchasing them, but most of them miss identifying when to trade it. Often, it is due to an iconic name like Apple or Berkshire Hathaway, or they become infatuated because of all the time, hard work, and ego they put into deciding to buy the stock in the beginning.
Riding Winners Longer
Another secret for maximizing the profit in online trading and investing is to stay with a top stock for as long as possible until it turns endangered. True, you won’t lose money by taking profits earlier, but you cannot make a lot of money. In fact, both amateurs and pro tend to sell too early.
In such situations, Eckhardt, the legendary trader, explained that this is because it goes against human nature to work in a way that maximizes profits. It is an important point. Instinct tells us to act in a way that maximizes our chances of winning, but that’s different from maximizing profits in general. We want to automatically take advantage of our choice of winning trades (and minimize our choice of losing trades). The focus should be on the overall profit and cost extension, such as knowing when it would turn risky and when to sell it. These are less challenging than you might think.…