Last Week I walked my readers through a hair raising experience that I went through years ago. The resulting discussion highlighted ways to use your fears to your advantage! This week I’m going to dig into greed and pride to show you how the rest of The 4 Deadly Sins of Trading can play a role for retail investors.
Let’s face it, if you aren’t driven by greed – you’re going to find it tough to reach your financial goals. Success as a retail investor hinges on finding healthy (risk averse) ways to feed your greed! One trick to help yourself avoid the downside of greed is to focus on percentages versus dollar amounts.
Here’s a quick example, when a $1K momentum stock trade hits $100 in profit over 8 weeks, there’s a choice in how you perceive the success of that trade. You can look at it as just $100 or you can look at it as 10%! While both points of view are technically accurate, measuring this trade as a 10% profit is a healthier way of thinking.
Get yourself into the habit of growing your portfolio at 5% a month over the course of the year. I don’t care what that dollar amount you’ve got in there, 60% of growth per year means you’re going to be pretty happy!
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