Weybridge Assets free publication

11 Nov 2014

6 Tips To Trading Success – Strategies and Goals

The stock market is a place for anyone who wishes to invest their money, hopefully for a good return.

Some people invest directly, or with a broker, while others may do this through ‘managed funds’, or perhaps ‘exchange-traded funds’.

Irrespective of the individual situation, all is best done with a basic understanding of how the market works, the key terms, and a basic set of rules for good investing.

This report provides SIX generally accepted rules for successful investing. Investors are invited to consult Weybridge Assets on any aspect of their investment strategies and goals.

1. A TRADING PLAN: What Do I Want?

Success is far more likely, when it is planned for. You can’t be totally assured of a certain level of return, but you can set targets and make the best moves towards achieving them.

A plan based on your goals and circumstances will simplify decisions and help avoid the many pitfalls. It’s one of the open secrets of successful investing. Your planning should define what kind of investor you are and set clear parameters for all decision making thereafter.

The worst approach is to chop and change between goals and investment strategies. Stick to one good plan unless exceptional circumstances arise. Weybridge Assets advisors can help you formulate a plan to suit your individual circumstances.

2. BUY VALUE: Be Informed

Returns from share investing are inextricably linked to the success and profitability of companies.

Successful investors select shares on this basis – they don’t simply focus on prices and trading volumes on the stock market. They get to know the companies they are considering investing in though their own or their broker’s research.

They also consider the prospects for the industry the company operates in and the overall state of the economy. Success is far more likely when you have well-informed views on the fortunes of companies. The best companies are those with a sound business, good financial health and good profit prospects.

When looking at profit, the questions to answer are: How sustainable is the current level of profit? If there is no profit yet, when will there be? Is the company expecting profit growth, and where will this come from?

3. DIVERSIFY YOUR PORTFOLIO: Spread Your Money Across Shares

There is of course risk involved in investing in any company. The best way to manage those risks is to spread your money across a range of shares. The extent to which you spread money across shares and the particular companies selected will reflect your attitude towards risk. Higher returns come only with higher risk. The right balance will exist for you, depending on your goal and particular approach to the market.

Some companies represent lower risk, for example larger, established companies with steady cash flows and profits. These can be contrasted with, for example, ‘start-up’ businesses in certain sectors that lack profits today, but offer exciting growth in an uncertain future.

If you have a ‘get rich’ goal, your choices may be weighted toward higher risk, higher return shares.

4. STAY INFORMED: Research, Analysis And Information Are Key

Share investing should be seen as long-term investing (but that doesn’t mean buying value is to simply leave in the bottom drawer and forget about).

Success requires you to stay tuned to what is happening on the stock markets and in the businesses which you (albeit in part) own – even if your investment goal seems to require minimal trading.

Staying informed means keeping an eye yourself on the market, business conditions, and developments as well as following broker research reports.

If your plan is to trade in and out of growing companies to secure high returns, then collecting information will be a constant imperative.

  • Your Weybridge Assets broker will have the analysis, research capabilities and all the financial tools at your disposal, to require you make a solid informed decision.
5. LIVE WITH VOLATILITY: Patience Is A Virtue

Patience is a definite virtue when it comes to share investing, so are steady nerves. The only absolute certainty is that share prices will fluctuate. That can be hard to live with while you wait for good returns over the longer term.

Price volatility is one of the inherent risks of shares. The market value of your investment will rise and fall, sometimes constantly. You can be caught if, for some sudden reason, you need to sell out in the short term and there’s often a niggling worry that a particular fall in price will turn out to be the start of a long term collapse in value due to some negative news that you somehow overlooked.

THE RULE TO SUCCESS IS:

Stick with companies you have selected, until you see definite signals to sell from their business or financial figures.

The best returns from shares (certainly if your goal is to earn income or accumulate wealth) are obtained almost invariably over the medium to longer term.

  • You will lose out if you panic in response to volatility.
  • Price volatility reflects the diversity of views about a company’s future fortunes.

Different views – some frequently changing as new information gets into the market – are being factored into the share price all the time. Volatility is usually greatest in companies with future prospects for either strong profit growth or declining profits. If your investment approach is to trade frequently, then volatility may be welcome. Be well informed and stay alert.

6. INVEST REGULARLY: Fuel Your Portfolio
  • INVESTING IS NOT A GET RICH QUICK SCHEME

To be truly successful at investing you need to do it regularly.

  • The best chance to acquire measurable wealth lies in developing the habit of adding to your investments regularly and putting the money where it can do the most for you.

For example: You can put $10,000 into a share account returning an average of 20% per year, and if you take all of that return out every year in ten years time you may have earned $2,000 every year. But you’ll still have only $10,000 in that account minus account keeping fees and the loss in inflation, tax etc., giving a total net worth of $30,000. Not recommended.

However if you reinvested that $2,000 every year, in ten years time you’ll have a total net worth of about $62,000. That is $62,000 in your share account now, with the potential to earn you $12,400/year at 20%, as opposed to the $2,000 you would still be earning with the previous scenario. Now this may not include potential losses in either case, but the idea is to highlight the benefits of regularly fueling your investments.

IN CONCLUSION:
  • INVESTING IS A CONSTANT LEARNING PROCESS

To summarise; Investing success may be obtained by using a combination of the above mentioned tips however, don’t limit yourself just to these.

No investor out there knows absolutely everything there is to know about investing.

Find what best works for you, then just get out there and have a go, and achieve your investing success.

  • At Weybridge Assets we are available to work with everyone from a first time investor, to seasoned traders, through to experienced financial professionals, in a transparent, amicable and professional manner.

If you are a first time investor and looking to buy/sell shares, or scouting for advice and information on certain stocks, or confused with which companies to invest with little or no market knowledge searching for guidance, then we are ready to take you to your first level and beyond.

If you are looking to build a share portfolio, or you are an advanced well-seasoned investor looking for assistance with complex financial strategies, Weybridge Assets has the infrastructure and people at your disposal.

We will ascertain whether a short or medium term investment strategy suits your immediate needs, and then together plan for a brighter secure future, long-term.

Disclaimer: Share Trading or Trading in derivatives carries a high level of risk, and may not be suitable for all investors. Before deciding to trade you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading, and seek advice from an independent financial advisor if you have any doubts. Unless otherwise noted, all information contained herein is sourced from Weybridge Assets, Inc. internal data. The content included herein has been shared with various in-house departments within the company of Weybridge Assets, Inc., in the ordinary course of completion. Parts of this presentation may be based on information received from sources we consider reliable. We do not represent that all of this information is accurate or complete, however, and it may not be relied upon as such. This document and the financial products and services to which it relates will only be made available to accredited investors of Weybridge Assets, Inc. and no other person should act upon it.

Weybridge Assets