How To Develop A Good Investment Strategy?

investment strategyWant to become a successful investor in Singapore? What methods and strategies are the best Singapore investors using, what are their secrets and whether there are some at all? How not to give up and not to lose confidence in your investment skills?

In this article, along with a famous psychologist Dr. Van Tharp we will try to find out the best investing approaches, plans, management and strategies. Does a perfect strategy really exist? Perhaps you need to be born as an investor rather than become one?

Losses: Who To Blame?

Dr Van Tharp believes that no one is born to be a successful trader. In order to succeed trading in the financial markets, you need to overcome your prejudices. For example, people are comfortable to follow the crowd, though it may not bring them profit.

Many beginners, who try themselves in investing, have no idea of what they are going to do. First you have to understand yourself, not the market. Identify the differences between who you are today and those who want to become, and then develop an investment strategy that matches your personality.

According to Dr Tarp, one of the key factors for successful investing is human’s psychology, which includes several components: a successful private life, a positive attitude towards life, the motivation to make money, the lack of internal conflict and responsibility for the outcome. Accordingly, a person will not achieve much in his life if he is exposed to stress and does not know how to deal with it.

If he is pessimist, who always expect for the worst, if is in conflict with himself and blames others for his failures. Such people usually tend to follow the behavior of the crowd. In addition, the loser traders are disorganized and they have no patience at all. They want to act now and immediately. This is a typical pattern of a loser behavior. However, Dr Van Tharp believes that anyone can learn how to win, and the question is how to learn.

What Elements Your Investment Strategy Should Include?

investment strategiesGood traders and investors are usually successful in games such as poker and chess. They are also able to remember cards in blackjack. Therefore, top traders develop good strategies and stick to them. Most of them also have well-developed investment plans to manage their investments.

An investment plan should include following items: goals and objectives, your strengths and weaknesses, which may have an impact on your actions and decisions, control over emotions, your style of trading and budget.

In your investment plan you should pay special attention to risk control. Most good Singapore investors will agree that the best way to manage your funds is to risk no more than 1% of the portfolio per transaction. A risk of 1% to 3% already represents a great danger to your account. The risk of more than 3% in most cases is a financial suicide, and many investors do it very often, without even knowing it.

Most investors, including professionals have no understanding about risks. Risk is often associated with the probability of loss. For some people stocks investment is risky. Others believe that risk is in lot size and leverage. But this is not the case. Risk is the amount of money you are willing to lose if your predictions are wrong and the market goes against you. When you define the risk this way, it changes your investment strategy.

What Are The Common Features Of The Best Investors ?

After years of research Dr Van Tharp has revealed common features of successful investors:

  • The absolute faith and understanding that we are in charge of our lives.
  • Interest to yourself and a desire to really understand yourself.
  • Discipline and a constant work on self improvement.
  • Best investors have following beliefs: money does not matter; losing in the market is a natural process; trading is a game; winners win before the game the beginning of a game; a deep thought over each situation is needed for success.
  • The ability to develop an investment strategy.

Yet … The perfect investing strategy does exist, but you must look for it within yourself. The secret is to know yourself and your true purpose. A good investor always earns in a long run no matter what happens in the market. And evidently, a bad investor is unlikely to earn money, even in a favorable situation.

The question is if you are ready to change, work on yourself by trying to achieve your goal, or you find it easier to repeat your mistakes and complain about life. You must understand yourself! Take a step forward, not only in words but in deeds too! Spend time learning about yourself and reveal your secret to success!

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