The Two Easy Steps For Investing Success!

in #money5 years ago

Sometimes we are our own worst enemies when it comes to investing. We jump into the complicated before laying out the simple foundation it takes for a task or in the case an investment or trade.

Keep It Simple Stupid (KISS)

After nearly 20 years of investing - you know what I have learned most? That keeping it simple and using the base principles of investing always end up serving me best.

There is literally just two steps that should guide and define all your investment and trade decisions.

1.) Know your Goal

Why would you ever invest in anything if you do not know exactly what you are looking to get out of it and how you will exit it when that goal is reached?

You see this more in active trading as people just jump in and out of stuff aimlessly with no clear target in mind. However, you see it happen in my illiquid investments like real estate too.

You have to know what the end goal is before you enter an investment otherwise I promise you that you'll be changing it on the fly and making emotional decisions on the fly.

It is not rocket since. Say for instance you are entering into a trade on bitcoin - is it a swing trade, a day trade? What is your upside and downside targets? Are you going to hold for one of those or look to book profits on daytrade?

It seems so trivial these questions, but they are actually very much a key to success.

2.) Define and Accept Risk

If you do not define what the risk is on an investment then a couple things happen. First, you leave yourself open to unknown exposure and then will have to make emotional decisions on the fly. Second, you cannot accept the risk because you don't know what the heck it is!

Accepting the risk on a trade or any investment is paramount before entering it. If you do not truly accept the risk then you will not have the fortitude to stick with the plan and get to your goal.

I know this from my own experience and from years of watching others do it. Truly accepting the risk on an investment liberates you to make logical decisions based on information.

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Step 1: Dont suck at life.
Step 2: Dont suck at being good.

Well said buddy, adding:
dont suck the neysayers advices!

Posted using Partiko Android

I like this simple advice. So hard to control the emotion end of investments. Sort of like getting into a gamblers high.

Yeap and it keeps you busy all your time.

Posted using Partiko Android

Simple is always good! I think that always stepping back and thinking about the logic behind the investment is good as well. Many examples of out of this world technologies that never make it because they miss the logic. I would say, if you wouldn't buy the product or service, don't invest in it.

In my experience in crypto, as well as those I've spoken to, I think #2 is particularly salient. Just speaking from my personal experience, I have failed to accurately assess the risk I'm willing to take, and that's cost me. You're absolutely right about making emotional decisions on the fly; I could have minimized my exposure by doing a risk analysis and setting some hard limits before I went anywhere near an exchange.

Live and learn I guess. Great post, though. The basics always bear repeating.

Yeah man. I wish I practiced more often what I preach.

I think these are prerequisites to trading. If you can't answer these you should not invest into any type of market but its just a beginning not a way to success.

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