Today’s investment landscape is more confusing than ever, with the evolving dynamics of government uncertainty, computerized trading, and a macroeconomic climate that hinges on global stimuli. It can be fairly dizzying, to watch all this unfold as you attempt to make informed decisions with your investments.
As a result, many investors are taking a step backward to refresh their understanding of the fundamental strategies and concepts that relate to the psychology of investing. Perhaps you might appreciate these three strategies that professional traders could use toward stocks and options.
1. Listen Better
Thanks to an increasingly connected world and its social communities like Facebook and Twitter, we’ve got an enhanced ability to tap into customers’ and investors’ opinions in real time, as well as companies’ investor relations as they develop. If you hear that your favorite company’s website is down (and that website is integral to their operations and profits), then it’s safe to assume that the stock and options of that company are going to experience some effects, and move in one direction or the other.
Learning to listen to news and consumer sentiment better, and analyzing how it seems to correlate with the movement of the stock or its options (in either direction), is a new science and strategy that can be advantageous as well as lucrative!
2. Read, listen to, and watch the advisors
Advisors are everywhere now, and you should be watching and listening to all of them. Why? Because other people are, and it’s those other people who make the trading actions that move stocks in either direction.
You don’t necessarily need to follow the advice of advisors, but you do need to know how their advice may affect your positions.
3. Don’t give back your profits
“Let it ride!” is a saying you’ll hear all the time in the gambling halls of Las Vegas, and the casinos love to hear that. That’s because they know if you play long enough, you’ll eventually lose, and give back your profits.
That can happen with your investments as well. Knowing your hurdle rate and the goal of return you wish to earn on your investments will help you know where to set the bar; when to take your profits off the table, or at least limit how much of them can be lost.
It’s by making moves of defense during peaceful times of trading that you’ll join the ranks of elite investors who methodically and systematically reap the big gains while avoiding the losses of the subsequent declines!