10 Ways A Good Investment Strategy Will Make You A Millionaire Stock Picker
1. Your investment strategy should take the emotion out of investing in stocks. You will sometime make the wrong stock investment; therefore, you may have to quickly get rid of it. You must be able to own up to a possible mistake and sell your stock. When you let your emotion get in the way it could be a big loss. Another example, a stock may be on the best run in its history and you get excited watching stock price increase. However, you have to lock in gains with a sell and emotions may make you wait until it is too late. Therefore, you should not let excitement and fear get the best of you when investing in stocks. Let your investment strategy work for you. Becoming a millionaire stock picker, it is possible if you can remove emotion out of the process of selecting stocks.
2. Your investment strategy dictates the stocks you will buy for your stock portfolio. You must conduct research on a company before buying its shares. However, the investment strategy will have guidelines that make the information more meaningful. Therefore, you are not just buying stocks because your buddy suggested a hot stock pick. A millionaire stock picker will let his investment strategy guide him or her to make an investment that is best for their financial situation.
3. An investment strategy will tell you when to sell a stock. Since share prices are up and down you may find it difficult to know exactly when to sell stocks. However, if you have parameters set to know when a loss is too much, and is time to sell, it would be great. In some cases, a stock may go on a run and increase in price. You may be hesitant to sell because of fear you may miss out on greater profits. In such a case, you must believe in your investment plan. For example, if your strategy dictates you sell stocks after a 3 percent gain, you stay disciplined and do it. Many would say they can time the market and know exactly when to get out or into a stock investment, but the best investors do not attempt to time the market. Many people may get lucky and think they are experts, but the market will put them in their place sooner or later; therefore, you should stick to your investment plan to know when it is time to sell your shares.
4. Your investment strategy should be more than a fair-weather friend. It should be able to work under the various conditions seen in the stock market. A good investment strategy should not go through constant change. If you find yourself changing your investment strategy constantly, it is time to re-think it.
5. It will make you a better decision-maker regarding your investments. You better understand the information; it will allow you to be more discipline. It helps you become more focus on what matters with your investment, Therefore, your decision-making will rock.
6. Your investment strategy will help you become a better stock researcher. If you already know what questions to ask before you begin your research, you will easily eliminate pointless information. You reduce the time you need to do a proper search of a company’s financial condition when you have guidelines or questions set by your investment strategy. For example, if you have decided you are going to only invest in company with a capitalization of $5 billion, your research get easier by knowing the guideline before you start. If you want to make a $1 million or more in the stock market, it helps if you know how to conduct research.
7. A good investment strategy should limit your losses and maximize your gains. You not only should know when to sell and when to buy a stock, but an investment strategy will ensure you are aware of the taxes and fees associated with investing. Taxes and brokerage fees will be paid on certain investments and you should know exactly what to expect.
8. Your investment strategy will reflect your risk tolerance level. Before you actually settle on an investment plan, you will determine your risk tolerance level. What risk will you be comfortable to take when investing? Your investment plan is created in accordance to what type of risk taker you are. For example, when you are younger with more time for your stock portfolio to grow in growth, you may want to take bigger risk.
9. Your investment strategy will help you settle on asset allocation that is best suited to reach your financial goals. Financial goals determine what type of investment strategy you will use. Henceforth, the strategy will ensure when it time to setup your asset allocation, it will be done based on your financial goals. Therefore, your asset allocation should always be geared towards reaching your goals. Since your investment strategy will have parameters set for certain market conditions, you will alter your portfolio’s asset allocation to create the best return possible during certain market conditions.
10. Your investment strategy should clarify and remove the noise that clouds our judgment. Therefore, as Warren Buffet would say if you do not fully understand your potential investment, you should not waste your time or money with it. Once you are able to find out all that is possible about an investment and it is within parameters of your investment strategy, you take action.
A millionaire stock picker has a plan or investment strategy. You should have an investment strategy before you spend any of your earnings in an investment. It is the smart way of investing. You can only become a millionaire stock picker with a solid investment plan and you will need a brokerage account like eToro OpenBook: to discover a new world of investing opportunities!