Success in investing does not come from your profitable trades. It is determined by how good you are at minimizing the loses you will have!
The most important thing you need to learn as an investor is to protect the money that you already have. There are two really important key concepts that you must understand:
- Market drops much faster than they rise
- A 10% drop = 11% rise. A 20% drop = 25% rise. A 50% drop = 100% rise
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Basic investing rules
To protect your money as good as possible you should have a set of investing rules that you follow and NEVER go besides. Below you will find our general set of investing rules. Make sure to make your own and stick by them. Your financial success literally depends on it.
- NEVER LOSE MONEY (Warren Buffet).
- Expect the best, but prepare for the worst.
- Always have your exit strategies in place and ALWAYS follow through on them.
- Go for no less than a 3:1 reward:risk ratio.
- Diversify accordingly to your risk tolerance and make sure to balance your portfolio at least once a year.
- Always do your due diligence before entering a trade.
- NEVER risk money you can´t afford to lose.