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There are two types of leverage
working in the market. First one is TIME and second one is
MONEY.
Learning to compound both is the objective of
this game. In order to grow capital, you need to first select the best
vehicle that can take you to your desired destination.
You need to select the type of market you
want to leverage in - is it going to be stocks, bonds, commodities, etc.
Investment Philosophy
Investing Psychology
Stock Selection
Timing and Execution
Money Management
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If you pick stocks, what sector is of most
interest to you?
Within that stock sector, do you want to
invest in small cap stocks or blue chip companies?
Stock selection is a path of questions
that takes you to the right vehicle type.
Selection also involves picking the right
time to invest using right strategy.
You can play the market from both sides -
long and short - even though most people just consider buying because of
industry drivers. In markets - you just need a changing price to profit
by difference. |
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Stock selection process can be based
on price activity (chart patterns), news, reports, trading systems,
expert recommendations, and other decision making tools for trading.
Stock selection should be consistent and
preferably systematic.
Constantly switching trading strategies is a
sign that you do not have your selection process solidified yet.
Your trade selection has to be in line
with your market logic (investment philosophy), otherwise you will not
follow it.
Best traders tend to have simpler systems
with iron discipline when it comes to trade execution.
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You are always filtering trading
opportunities to find the best move potential - that is what
selection is all about.
Buy and hold strategies most
institutions recommend makes their business simpler and catering their
services to selective clientele.
Selection is important in many ways as you
can see.
This buy and hold example will be expanded
later on, since this is the most common advice given to public
investors. |
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