13 Ingredients of a winning investing strategy
Investing is like cooking, you need the right ingredients and put them in the right order together to get a winning strategy. So what are those Ingredients?
1. Magnetic Goal
A Magnetic Goal is important, it helps you to have a clear picture of what you are expecting and how you will benefit from it. Financial freedom or buying a house ect.
2. Model of the Market or visual image
a) How do you think does the Market works?
b) In which countries can you invest?
c) Which Investmentstrategy are likely to work
d) What are the advantages of your Investment
e) What tool you need to Invest?
3. Diligent developed strategic goal
To reach all your Investment Goal you need to divide your investment capital in several numbers of strategies. Each system needs two goals:
a) Targeted Profit in certain Timeframe
b) Akzeptable Drawdown
4. Positionsizing, that helps to reach your goal
Positionsizing is where the Magic happens. How much you are buying from one position, most people dont think about it, but here is where responsibility for safe trading happens for a good performance. It’s strongly connected with the targeted Profit.
With deeper Understanding, it’s possible to take bigger risk.
5. Recognize Markettyp
In a Bear Market trading is different then in a Bull Market. Bear Market you need to sell fast and buy slowly. In a Bull Market you need to do the opposite. Buy fast and sell slowly.
6. Mental Preparation like an Elite Athletic
a) Visualize your victory
b) Mentalize the perfect execution
c) Plan what you do, if something goes wrong
7. A good setup
A good setup for a Entry are for example:
a) Bull Market
b) 20% Undervalued
c) 25% ROI or more
8. Patience is a virtue
Topinvestors dont invest in the first promising sign, but they wait for low risk, high reward entry point by using technical analysis
9. Inescapable Exit
Stoploss should be set below a strong support level
10. Specific Profit Target
A specific target of taking profit.
11. Complex Exit Strategy
Dont let good trades turn into bad trades.
A good trader has several Exits, which
- protects profits
- creates enough Profit
- takes opportunities and risk of the market into consideration
12. Scientific Approach
It needs more then 10000 hours to master a skill. You dont only need exercise, but also the right exercise. As Investor you get better if you exercise the right, structured and scientific. After the beginning of the Investment, you only make small controlled changes to isolate problems and testing changes. 1 Variable per time unit.
13. Master Investor Mindset
Think different then all others. A Master Investor does the opposite of a beginner.
- Optimistic about the future
- Ironhard discipline
- Trust in your tradingplan
- thankful heart