Investing Money: Profit Taking Guide & Trading Suggestions -
Investing Money: Profit Taking Guide & Trading Suggestions

Investing Money: Profit Taking Guide & Trading Suggestions

Mass Psychology Key Principes

Divide your money into equal lots

 Investing Money:

10-15 lots would be a good place to start. When you add more funds to your account, use the new money to create another lot. In other words, if you have 10 lots (let’s assume each lot is 1000 dollars) and you add an additional 1000 dollars to your portfolio. You can use this to create a new lot, which would bring your new total to 11 or spread the money equally among the existing 10 lots you already created.

Always maintain some cash (assign 1-4 lots for cash) for those mouth-watering opportunities that have a habit of suddenly presenting themselves.

If the portfolio has the word “Hold” in the comments section that means no new positions should be taken in it. Until the word “hold” is removed, no new money should be put into this position.

Allocate the same amount of funds to each position

This might seem redundant but we are going to repeat it anyway as we have seen too many people ignore this rule, and then complain when things go wrong. When it comes to  Investing Money our money, deploy equal amounts into each position.

Never invest more in any one recommendation unless you are a seasoned trader or are knowingly willing to take on more risk. Most investors tend to lose not because of bad choices, but because of a lack of portfolio management skills. The fastest way to lose is to spread your money unevenly over your investments.

Tread lightly when it comes to Investing Money in options

Never dedicate more than 20% at most of your entire portfolio to options, unless you are a professional options trader.  Once you generate profits, you can allocate more funds to options from the profits generated.   If possible try not to invest more than 2%-3% of this money into a single option position or open more than one position if the sum involved is above the stated limit.

What it means to take 1/2 or 1/3rd of a position

money lots thirdsWe usually divide our money into three lots but occasionally we might divide the given sum of money to invest in two lots. Taking 1/2 a position means that you divide the money you plan to invest into two equal parts. The same rule applies to a 1/3rd of a position; the only difference being you divide into 3 lots.

Stops

stop limit orderAll stops issued are limit stops. Do not use the standard stop, because if it is triggered you order will be treated as a market order. Example if you have an order to sell INTC at 30 and it trades at 29.95 your stop order will be triggered and a market order to sell will be placed; if INTC should suddenly drop to 25 you will be filled at 25 instead of 30. A limit order will be triggered when INTC trades below 30, however, you will only get filled at 30. Some brokers do not provide this option in which case you should use a mental stop or switch brokers.

Set A Profit Target

set a profit targetEach individual is different so we cannot tell you which target is best for you. Some individuals are happy with 20% gains, while others are ecstatic with 15% gains. Don’t force a target on yourself, choose one that you are comfortable with it and stick with it. At least do this for half your position.  While we do our best to get you in at the best price, we do think you should pay some attention to the exit as nobody cares about your money more than you. Secondly, our profit strategy might not fully mesh with yours. The higher the profit target, the more volatile the ride is and the higher the risk. If you hit your targets earlier consider it as a surprise bonus and take time to enjoy the other simple things in life.

Do not get emotional

no emotionsThe market has no mercy for emotional investors. The two worst emotions in terms of investing are fear and euphoria. So do not let your emotions do the talking.  Emotional traders nearly always end up in the red.  Understand the basic concepts of mass psychology it could greatly enhance your trading experience.