Why Triggers are Important
You don’t have time to watch the market everyday. You have work, life, family, friends, Netflix and Instagram. Managing your own investment portfolios in your brokerage account often times takes a backseat. For those who have no interest in self managing their investments, robo advisors came to serve their needs in a cheap efficient manner.
But for those DIY investors, who serves them? The brokers have turned into somewhat of a utility, and unless you are an active day trader with the time to learn advanced tools and software, you have very little services to chose from and you end up doing nothing at all.
At Trigger, we are trying to change that. We watch the stock market for you. We help you simplify your investment ideas into triggers, which are simple IF THIS THEN THAT statements. When a trigger’s condition is met a real time, actionable alert or investment is made. For example, “If GOOG trades at a one year high, Then sell GOOG”. We leverage the events, stocks and indicators you care about and bring them to you when they happen, helping you better manage your portfolio, save time, and capture great opportunities you didn’t have before.
We want to highlight and explain a trigger’s value proposition for any individual investor, and encourage all DIY investors to be thinking with a trigger investment philosophy. Below are the top 4 reasons why triggers are important:
Think like a trader
Traders are risk managers, they think about their portfolios in terms of key events that drive their P&L from day to day. In order to be the best risk managers, traders always trade with discipline and always have a strategy -never off greed, fear or gut. With this in mind, they trade always with take profits and stop losses, waiting for the moves they care about to occur and leverage the use of conditional statements to do so. Investing without a strategy and discipline is an easy way to lose your hard earned money.
Triggers let you think like a trader, with the added upside of not having to sit in front of a computer watching the market all day long! If we started to think about our target profits and tolerable losses even just a little bit, we can set triggers that convey that strategy, that discipline. We will be proven right and proven wrong, however having this framework of a trigger investment philosophy will help us better manage our own small, (yet growing!) investment portfolios.
If we start thinking about our target profits and tolerable losses even just a little bit, we can set triggers that convey that strategy, that discipline
An excellent vehicle to explain markets
Financial markets are not an easy concept to grasp. Events happen every single day that affect prices of all assets classes around the world. The Fed raising interest rates, an election result in a South American country, a company going bankrupt, OPEC meetings and SO MUCH MORE. Staying on top of news and events is one thing, knowing how these events affect your portfolio and markets around the world is knowledge that’s much harder to come by. Triggers let anyone explain their rationale behind an event’s causation to a move in an asset, in one statement.
Triggers let anyone explain their rationale behind an events causation to a move in an asset.
Believe that the unemployment rate affects LinkedIn stock? Or the Fed raising interest rates will cause the market to selloff? Or a key technical level in a security will cause a rally? Or an earnings announcement coming in above a certain number will please the market? All can be easily explained with triggers, both by triggering on an event and expressing a view via a tradable security.
A complicated idea, into a simple statement
OCO, Contingent, Trailing Stop Loss order, sound familiar? Yeah not really. These are the orders that brokers have under the “advanced” area of their interfaces. All of this jargon does nothing but intimidate and isolate you from the “pros”. These are powerful orders only available to those who have been trained, but under the hood, it can all be phrased as a simple IF THIS THEN THAT statement.
Let’s break one of these contingent orders down. You can use contingent orders to express various investing strategies. For example, a fundamental value investor will probably want to buy a stock if it’s trading at a one year low. Or a momentum trader will probably want to buy a stock if it’s trading at a one year high. Two very simple strategies, same concept, but no jargon. IF THIS THEN THAT. Want to chain conditions together, like “If my GOOG stock is up 30% AND it reaches long term capital gains, THEN sell 1/4 of my GOOG”, well that is still a trigger. Your brokerage tells you it’s a multi-contingent order. No wonder you never used it!
Triggers have the power and flexibility to execute simple strategies like the ones highlighted above, as well as more advanced ones like “if CMG Twitter sentiment changes to bearish, THEN sell CMG”, or triggers on moving day averages, or weather or bitcoin. The same unit of a trigger is used for all ideas.
Discipline around selling
Let’s face it. Most people buy and hold. We’ve been told that this is the optimal strategy, but is it really? unless we all plan on holding until we are 50, then buy and hold really means nothing without some type of an exit strategy. By not watching the market all day long, we miss ample opportunities to sell and take home some profits.
Triggers let you decide on an exit strategy for securities that you own. There are many different ways to determine when to sell (that’s a whole separate post!). You could sell when a P/E ratio is at an all time high, or when you hit 30% gains, or something trades at 1 or 2 year high etc. They key is not to sell your entire position as once, but a fraction of it over time. If the market continues to go up, great! You still own part of this position and still get the profits! and if the market goes down, hey you already captured some returns now the potential loss is less. Simple no?
By virtue of not watching the market all day long, we miss ample opportunities to sell and take some profits.
Triggers are powerful. They are concise, simple tools that help us understand our thought process when investing in real time. We want to inspire all DIY investors to trade not from greed, fear and uncertainty — but from conviction, confidence and discipline.
If you want to try out Trigger, sign up for our Beta at www.triggerfinance.com.
Happy triggering,
Team Trigger
