Superhero Trader Key #1: Cash Is A Trade!
One of the most powerful lessons you can learn is how to be patient when it comes to the financial markets. You must think of your investing as one long, continuous journey with flashes of fury and periods of rest.
You strike with plenty of activity and action when you feel you have the "best of it" and sense that the opportunity is ripe.
And you recede into cash, or trim your market exposure, when you're unsure and your clarity is clouded.
That's right -- you overweight in cash and keep your powder dry until the market shifts and shows you the path to high probability outcomes.
Markets are very dynamic, and the landscape is constantly changing. You simply want to put your money at risk only when you feel the conditions are favorable.
So, when in doubt, sit out.
Superhero Trader Key # 2: Never Over-Leverage!
If Superman were an investor, too much leverage would be his Kryptonite.
I've seen firsthand the way financial ruin can follow from an investor's simply over-leveraging or putting excessive capital at risk.
This is an outcome I wouldn't wish on my worst enemy, as the repercussions in many cases extend far beyond the financial losses. Emotional distress and destruction to personal relationships are common side effects.
In truth, this can easily be avoided. And protecting your assets from potentially catastrophic risk should be paramount before you invest 'dollar one' in the market.
If you can't quantify your risk within a realistic range, you need to take a step back and understand why.
The easiest way to protect yourself from excessive risk is to simply diversify your assets. Essentially, don't put all your eggs in one basket, so if you happen to slip and fall by chance, they don't all crack.
The bottom line is that you'll act on many trading ideas, and not all of them are going to work out like you've planned. Sometimes you may be way off base -- it happens. But don't let the positions that happen to go awry financially cripple you. That's the quickest way to the exit door.
Trade with your head -- and not over it. Simply keeping your emotions in check will allow you to make better, smarter decisions while ensuring your solvency.
Superhero Trader Key #3: Make Yourself Fearless!
Putting real money on the line, especially for newer investors, can really elevate the old stress-levels. I can certainly relate. I was a "babe in the markets" at one point too.
But what you have to realize is that investing and trading doesn't have to be scary. And there are several ways to position yourself in the market that can afford you literally around-the-clock protection of your overall capital.
Trading options instead of directly trading stocks and ETFs is a great way to do this. You can truly define your risk before entering any position, and you can commit far less money while potentially generating much greater returns.
By learning a couple of easy option strategies, you can remove nearly every unexpected risk.
For example, back in 2010, the May 6 "flash crash" (a.k.a "The Crash of 2:45") took billions of dollars from unsuspecting investors. Even if you were a disciplined stock trader with well placed stop-losses on the book as protection, you quickly realized how little protection they truly offer when panic grips investors and gaps appear in prices.
The reality is that had traders structured their positions using an easy-to-understand options strategy, May 6, 2010 would have played out much differently for them.
The point here is simply: Applying a couple of easy-to-use strategies can remove the fear of big unexpected losses. You'll sleep well at night, knowing your positions are fully protected and your risk is truly defined to a maximum limit.
Complete control is a powerful equalizer against fear.
At the end of the day, successful investing doesn't have to be brain surgery, if you use your head and follow these three simple keys:
1. Exercise patience and pick your spots...
2. Trade within your means and keep emotions in check...
3. Employ fully hedged strategies that require less capital, generate higher returns, and define your risk.
You'll be way ahead of the game, and your portfolio will go "up, up and away!"
If you're looking for even more ways to boost your earnings, make sure you check out the replay of Chris' live event from this past Tuesday.
On this event, Chris reveals the secrets big institutions use to time their trades, and shows you how you can use these same secrets to profit.
Click here now to watch it.
See you soon,
Costas Bocelli
True Market Insiders
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