Overcoming Not Having A Crystal Ball Through Planning

Often people believe that if they do their research and select the right shares they have conquered the game of share market investing. However putting in the effort of selecting the right shares is only half the story.

After you have identified which shares will give you the best chance of succeeding then you need to create a trading plan so you know what you will do IF the share moves in a particular direction. Why the big IF, as hard as it is to take none of us have a crystal ball – but we can compensate for this through planning.
Every trading plan should be made up of several components.

An overarching strategy or plan should be in place so that it doesn’t matter if the share moves up down or sideways you will always know what course of action you need to take. Think about this for a second, if you have a set course of action to take regardless of what happens with the share the fear or trepidation that you may have felt before will be gone.

As a consequence of this strategy you should know where you want to place your order, risk and target prices. It is very important that these levels are realistic and not just made up to make your investment seem worthwhile. Having these levels set cuts out a lot of the emotion that you’ll experience while in the markets and prevents you from committing the cardinal sins of share market investing.

Next you should ensure that you are making a worthwhile trade ie is the amount that you’re risking on the trade worth the return that you could potentially gain from it? Generally a ratio of 1:3 should be sought. In other words if in a particular plan you stand to make $3000 if the share price goes up you should not be willing to risk more that $1000 if the share price goes down, so for every dollar that you are risking you should be looking to make three.

Finally you should decide how much money you actually want to use in any one trade, the best course of action here is to ensure that you are using a similar amount across your portfolio and that you are buying shares based on dollar value rather than a set amount of shares each time. This is purely to ensure that you maintain a balanced portfolio.

For example if you decided to buy 1000 shares with each trade and one stock is $30 and another is $3 then your portfolio will be out of balance as you will have $30000 in one stock and $3000 in another.

In general this type of trading plan is sufficient for an investment approach. However the more information that you include in your trading plan the better. And most importantly don’t forget to track the results that your plans are producing, you will only be able to gauge your success in hindsight so you must know why you decided to take a particular course of action.

About the Author

Phil Wengier, VIC, Australia

More details about Successful Investing can be found here . Phil Wengier has been successfully investing in financial markets for over 30 years and is the owner of several companies. In particular, Saratoga Pty Ltd has been on the Internet since 1996 helping many who wish to discover how to invest safely and successfully. If you would like to subscribe to my Savvy Investor newsletter please click here

Keane – Crystal Ball

Ball Quilted Jelly Canning Jar 4 Oz., Case of 12 $7.90 Make jam for gift baskets in these cute little jars. You might also use them for organizing craft supplies or herbs and spices….

Ball Deluxe Quilted Jelly Canning Jar 8 Oz., Case of 12 $8.04 Putting by the seasonal harvest requires the proper tools. These quilted jars will give your preserves a special presentation, worthy of holiday gift-giving, as well as making sure the seal is airtight….

Anchor Hocking Heavy-Base 15-Ounce Iced-Tea Glasses, Set of 12 $16.77 *** (This item sold as a pack of 12) ***Crystal clear glasses. Open stock. Dishwasher safe….

Funhouse $5.02 All products are BRAND NEW and factory sealed. Fast shipping and 100% Satisfaction Guaranteed….

Black Keys Live at the Crystal Ballroom $6.91 Studio: Wea-des Moines Video Release Date: 11/18/2008…

Under the Iron Sea $3.49 If U2 hadn’t already released a pair of career retrospective discs, this British trio’s second album would neatly do the trick in one. Not much of a surprise since Keane spent a good deal of time supporting Bono and company following the release their breakthrough debut, Hopes and Fears. From the melancholic “Crystal Ball” to the sinisterly beautiful “Is It Any Wonder?” (a blatant homage to “Zoo S…

Star Fairies (1985) When you whisper “star light, star bright” who listens to the wish you wish tonight? In the Land of WishComeTrue, the six enchanting “Star Fairies (TM)” each with her own unique magic talent, hears your every hope. So, wish upon a star — makes no difference who you are — and watch your dreams come true….

Curse of the Crystal Eye [VHS] $5.75 …

Fa Cup Final 1990: Man Utd V Crystal Palace [VHS] …

Moonrays 99924 Color-Changing Glass Ball Fixture $9.90 Mesmerizing. Watch the colors in the glass ball slowly change from one to another. Group several fixtures together in a flowerbed for an especially striking effect. Crackle glass ball. 7 color changing LED. Rechargeable NiCd battery (included). 17” high….

Be Sociable, Share!

•