Why 95% of Investors Lose Money
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I'd like to take just a moment to talk about a topic that most traders and investors never take the time to think about, and it's a topic that most traders and investors also never even implement. As a result, it comes as no surprise that 95% of all traders and investors never make any money. In fact the very same 95% of people, lose all of their money. This topic is so important that it makes no difference what your trading or investment strategy is, it applies to you.
What I'm talking about is establishing a directional bias, that's rooted in fact, before the stock market even opens at 9:30 AM Eastern time. With that being said, there are two points that need to be made. The first point is to illustrate the benefits from having this bias before you even hit the buy or sell button. From a psychological standpoint, being able to anticipate future movements reduces an enormous amount of stress, anxiety, excitement, and fear, which results in making less trading errors. When you have an idea of what the future moves of the market are likely to be, you can do a few things before the market opens that you otherwise would not be able to do. One of which is to adjust your position sizing without having to gauge intraday volatility. This allows you to mitigate risk of loss. The other of which is to have a much better idea as to when to take profits in risky assets such as stock market futures in order to move into safer assets such as treasuries or the US dollar.
This all sounds great but how do you actually do this? This brings you to my second point. You can determine this bias and can do so quite easily. In fact anybody can do it. What you need to do is take a look across broader markets, during a specified period of time, and plot the relative movements of each asset class against one another. This will quickly and easily tell you the overall broader market sentiment from the Asian and European sessions whose themes generally carry over into the US stock market and stock market futures. Specifically what you're looking for are the movements of equities, treasuries, currencies, and commodities compared to each other.
Plotting these movements is so incredibly simple, and sounds so mundane and boring, but very few people ever make an effort to follow these steps. Sometimes the simplest of tasks allow for the greatest positive impact on our trading and investing. This is one of those simple tasks is far too important to overlook. If by chance you are not able to complete the above steps there are certainly resources on the net that can provide you with this information for free. These sites compile this information in a manner that is easy to understand and comprehend. With their services, you won't have to go out looking for this information yourself. Utilizing one of these free services saves you a tremendous amount of time, and also money, because you won't have to subscribe to numerous data feeds.
It really is a no-brainer that taking the few extra seconds a day to gauge overall market sentiment has way more upside potential than downside when it comes to your overall trading and investing performance. This small step is literally one of the things that separates the successful 5% from the broke 95% of traders and investors.
Article Source: Articlelogy.com
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