Investment Articles

To learn to invest informed and learn how to invest with confidence most people should break the subject down into two parts: investment basics and investing. By tackling topics or articles in the following order you can learn how to invest money as an informed investor without wasting too much time and effort.

First get a handle on basic financial concepts, terms and investment basics. Every investment in the world can be evaluated based on just a few simple characteristics. Don’t invest money in anything until you know if it fits YOUR needs for such things as safety, liquidity, growth, and income. Only if you invest informed can you avoid the costly mistakes that are caused by picking an investment that’s not right for you.

Then, as a basic investment guide, focus on stocks and bonds because this is where you are most likely to invest money in the future. Once you have a handle on these securities, its time to get familiar with investment markets and how to invest in them. If you don’t understand the stock market, for example, your knowledge of stocks (equities) is of little value in the real world of investing.

Learning all about mutual funds should be your next step and shouldn’t be difficult now that you know stocks and bonds. After all, these securities are where most mutual funds invest money for their investors. And mutual funds are where most investors invest money in stocks and bonds in 401k plans, IRAs and other accounts. There are thousands of funds to choose from but 99% of them fall into 1 of 4 general categories.

You should also get familiar with other investments like money market securities and annuities before you move from the INVESTMENT GUIDE phase of your education to the INVESTING GUIDE segment. In other words, before you can learn to invest informed you’ll need a clear understanding of all of your major investment options and how they compare in terms of their basic investment characteristics. This is not as difficult as it sounds since the universe of investments can be condensed into only 4 different categories or asset classes: cash equivalents (safe, liquid investments), bonds, stocks, and alternative investments.

Investing is the art of putting an investment strategy together and managing your money at a level of risk that’s within your comfort level. Once you understand the investment end of things you need a game plan in the form of a complete investment strategy. Asset allocation is the single most important part of any strategy; and your portfolio asset allocation over time will be the main thing that determines your success or failure as an investor. Concentrate on learning asset allocation: how to invest money (in what proportion) across the 4 asset classes mentioned above.

Now you’ll also want to learn to apply various investing strategies or tools to help offset risk while earning higher than average investment returns. The two important things to understand when you get started in the learning process are the following. Learning how to invest is easier than you think if you take the subject one step at a time in a logical sequence. Second, learning to invest informed is actually a two step process: learn investment basics, and then learn investing.

Don’t get discouraged if you don’t understand something in an investing article you are reading. Back up and search for another article that covers the topic or area that confused you. For example, if you are confused by an article on bond funds it’s probably because you don’t understand bonds in general. Most people don’t. Most people don’t get much out of an adventure novel, either, if they start reading on page 47.

Take fear and anxiety out of investing. Learn to invest informed.

A retired financial planner, James Leitz has an MBA (finance) and 35 years of investing experience. For 20 years he advised individual investors, working directly with them helping them to reach their financial goals.

Jim is the author of a complete investor guide, Invest Informed, designed for average investors or would-be investors of all levels of financial background and experience. To learn more about investments and investing and his new financial guide go to http://www.investinformed.com.

The powers that be want you to invest in Iraq. Former president George W. Bush wanted you to invest in Iraq. In fact, his administration passed legislation encouraging Americans to invest in Iraq. So, how do you do it? How do you invest in a country?

Probably the simplest way to invest in a country is to look for an ETF that makes investments in that country. At the time of this writing there were no ETFs specializing in Iraq. However, that may soon change.

In the mean time there are a couple things you can do. First off, you can invest in the currency of the country.

Unfortunately with Iraq, their currency does not yet trade on the FOREX market. There are currency dealers that will sell you the new Iraqi Dinar (IQD the currency of post-war Iraq). You can purchase that and hold onto it, waiting for an upswing in the value, or an reinstatement on the world’s currency markets. Many investors all over the world have done just that.

Another way to invest in Iraq is with its new stock market, the ISX. The downside to that strategy is that until the IQD is valued on the world market, you will have to open an account in Iraq to trade their stock market. Relax, you won’t have to go to Baghdad to do it. You can do it by wire and fax. There may even be some banks in Iraq with online applications.

Once you have an account set up inside of Iraq, you can benefit from any rise in their currency value and/or its stock market. Many investors are looking for ways to invest in the new country. The upside potential may well make it worth the extra hassle. If the extra effort doesn’t appeal to you, keep your eyes open for Iraqi ETFs that will surely surface soon!

Doug West has worked in Financial Planning and Investment training for over 20 years. Get his No-Cost Audio Report on how you can Secure Your Retirement with Free-Online Tools: Get your Free Report Here and discover Rock Solid income strategies, including how you may be able to increase your social security check by 50%.

To the new investor investing money looks complicated. It is my viewpoint that there are two investment basics you need to know to make sense of things when you start investing. Investing money CAN be simplified.

Investment basics #1: There are 5 things you must consider when investing money. Investment basics #2: There are only 4 different types of investments in the world.

The 5 things you must consider are called investment characteristics. You can rate investments to see if they fit your needs in terms of: liquidity, safety, growth, income, and tax treatment. For example, let’s say you are single with a good job, money in the bank, and a modest mortgage. Your goal is investing money for retirement.

Your 4 basic investment options starting with the safest: cash equivalents & savings products, bonds, stocks, and alternative investments (like real estate, gold, and foreign securities). That’s it. All investments can be placed into one of these categories. You want to start investing money to make it grow for retirement; and at this point you have all of it safely making miserly interest in bank savings accounts, paying income taxes on what interest you earn.

As a new investor you have been investing money as follows in regard to investment basics #1: high liquidity, high safety, no real growth, small income, with no tax breaks. This means that you have easy access to your money without penalties, have very little if any risk of loss, are making small returns, are receiving income you don’t really need, and are paying income taxes as you go.

Looking at investment basics #2: all of your money is in the first category. You need to start investing in bonds to earn more interest or income. Then start investing in stocks and alternative investments for growth and higher returns. Consider your 401k at work and/or an IRA to get tax advantages.

The new investor can not hope to master the challenge of investing money overnight, but now you have some real investment basics under your belt. Learn all you can about bonds, stocks, and alternative investments as well as cash equivalents or money market securities. Then concentrate on learning and implementing a sound investing strategy.

Once you have a firm grasp of the basics, the rest of the pieces of the puzzle will be easier to fit together. I know this because I started investing with an MBA under my belt as a new stock broker. I was well versed on stocks, bonds and other securities; but it took me years to put the big picture together. I was trained to sell investments. The rest I learned through mistakes and self-study.

We’re all a new investor at one time or another. Do your homework and read all you can about investing money. That beats the heck out of learning through expensive mistakes.

A retired financial planner, James Leitz has an MBA (finance) and 35 years of investing experience. For 20 years he advised individual investors, working directly with them helping them to reach their financial goals. Jim is the author of a complete investor guide, Invest Informed, designed for average investors or would-be investors of all levels of financial background and experience. To learn more about investments and investing and his new financial guide go to http://www.investinformed.com.

Personal investing makes the average new investor uncomfortable. I say this because I was a financial planner for 20 years. I found that most people can relax and start investing with more confidence. If, that is, they make money in the process and learn some investment basics… like the difference between stocks and bonds.

You can work with a financial planner or start investing on your own. But when the economy turns sour and you’re losing money, you’ll feel the stress if you don’t know investment basics and have no sound investment strategy. Let’s start our personal investing lesson with investment basics, stocks and bonds.

Stocks are also called equities and they are VARIABLE growth investments. They involve higher risk, but over the long term have historically returned about 10% a year to investors who just buy and hold them. Equities fluctuate significantly in value; hence there is significant market risk here. Bonds on the other hand are FIXED income investments that have the attraction of paying relatively high rates of interest. They are safer and have returned about half as much over the long term. But they too fluctuate in value.

Traditionally speaking, financial planners generally recommend that you invest in both stocks and bonds to get balance in your investment portfolio. That’s the basic investment strategy that’s been recommended to the new investor for years. Often, when stocks are falling bonds are doing just fine and vice versa.

The basic investment strategy: invest 60% in stocks and 40% in bonds to get a moderate balance with overall moderate portfolio risk. That makes personal investing sound pretty simple doesn’t it? And actually it has worked pretty well for years. Just knowing this should boost your confidence and help you start investing with less stress. However, don’t think that this simple strategy will eliminate all stress in this day and age.

This time things could be different because interest rates are at all-time lows with only one way to go in the future… UP. Here’s the problem. Rising interest rates ALWAYS cause the value of bonds to fall. They also hurt stock values as well. With interest rates so low the new investor is tempted to look for higher returns in stocks and bonds.

You’ll need more than just a grasp of investment basics to survive another downturn in the economy. What you really need to get your personal investing ducks in a row is an ongoing plan of action; a sound and complete investment strategy. Then you can start investing with confidence. Check for articles on the subject because investment strategy is that important, especially today.

A retired financial planner, James Leitz has an MBA (finance) and 35 years of investing experience. For 20 years he advised individual investors, working directly with them helping them to reach their financial goals.

Jim is the author of a complete investor guide, Invest Informed, designed for average investors or would-be investors of all levels of financial background and experience. To learn more about investments and investing and his new financial guide go to http://www.investinformed.com.

Are terms like ROI, diversification, cap rates, risk analysis, puts & call confusing you? If you are seeking to build your wealth for retirement or to achieve life goals, you need an investment plan. My guide to basic investment fundamentals is simple to understand. It is always best to start young saving and investing but it’s never, ever too late to start.

Investment Basics

Investments are both a hedge against insecurities of the future from inflation and for increased needs for money such as for retirement. Critical to investing is the power of compounding. This is what makes investing attractive. Your future wealth is decided largely by the prudent investment plans you undertake now. Investments always comes with an element of risk. It is for you to weigh the level of risk with possible rewards. Understanding risk is the cornerstone of investment fundamentals.

Diversification is the key to good investment management. Spreading your assets and investments across various types of investment spreads your risk. You never want to put too much money into one category – such as all your money in one stock. Spreading you investments across stocks, bonds, real estate and other categories better insures that if one stock or investment category goes south, it will be minimized by other categories that are doing better.

Risk is about your comfort level. If you are young, you may be willing to take much larger risks, and potentially larger rewards, than if you are nearing retirement when you don’t want to risk losing the value of your portfolio.

Investments such as treasury bills, CD’s and bank deposits earn a fixed interest; and they are low risk. Stocks and mutual funds promise more growth potential. When they do well, you stand to gain because you earn money on the money your investment makes. Investment in property can bring you handsome returns but over a period of time. Those willing to take greater risks use leverage. That is, they use the banks money to make money. Borrowing to buy stocks, or borrowing to buy an investment property is riskier but gives you the potential to earn much more. Diversifying investments ensures that you don’t lose everything if a particular investment doesn’t work out well.

Funds: Decide the amount that you can set aside for investment. With right planning, you should be able to set aside and build up an investment fund. Ensure that you have built sufficient cash reserve to meet short-term emergencies. Six months of salary put away in a low-risk savings account is a good place to start. Plan your expenditures so as to redirect funds for investment. Put away a percentage of your pay increase to long-term savings investment.

Plan: Take a broader perspective when planning your finances. Chalk out your financial goals such as a child’s education, retirement or buying a home. Analyze your current situation and determine your needs.

Knowledge: You should consider taking the guidance of an investment adviser. An adviser can help in tailoring your investment to suit your requirements. This would work well for those strapped for time and those who are not well-versed with financial planning.

Time: Investing in stocks and bonds is not everyone’s cup of tea – nor do you have the time to keep up on when to buy and sell. If you buy rental property, it takes time and effort to collect rents, handle complaints, fix problems, etc. Maybe REITs, which are like stocks in real estate, is a better alternative than owning property outright. Be realistic about the time you can put into managing your investments.

Expectations: Be realistic and reasonable about expectations on investments. While some may far surpass your expectations, sometimes investments may not pay off as well as they promised. Plan your tax liabilities too when overseeing your investment plans. Consider capital gains that may come into effect.

Preparation: Before placing your money towards an investment, weigh the cost of the investment. What are the broker and transaction fees if you are buying stocks or bonds. If buying investment property, carefully detail out all expenses and you will need to project them into the future.

The best advice is to start small and learn. As you gain confidence in yourself, it is easy to expand your portfolio.

As a serial entrepreneur and active financial investor, Howard Debs offers guidance on building your wealth. More resources and advice from Howard for both novices and experienced investors at Achieve Wealth 101

As a new investor you probably wonder what a securities investment really is. There are basically three investment securities every investor absolutely needs to understand before deciding on a financial investment. Here’s your basic investment guide. Corporations issue equity securities to raise money in the form of common stock; and debt securities to borrow money in the form of bonds. The U.S. government issues debt securities to borrow money from investors in the form of Treasury bills, notes, and bonds. And then there are complicated and risky investment securities like derivatives, where the new investor does not belong.

As a basic investment guide I suggest that the new investor view the world of investments as three distinct and separate segments: savings alternatives, tangible assets, and investment securities. A bank savings account or CD is a savings alternative, not a security. Physical real estate property is a tangible investment or “hard” asset, not a securities investment. Stocks, bonds, and mutual funds are each a financial investment and they are the investment securities that all investors need to understand. Stocks and bonds are originally issued (sold) to the public. Then they trade in the secondary market on exchanges, as in the stock market. Since there is investment risk and the public is involved, these securities are regulated by the government.

Since they trade in organized markets or exchanges, investors have liquidity and can easily buy and sell stocks and bonds. A securities investment can offer higher returns and/or more interest income than money in the bank. Along with this comes higher risk. Common stocks are a financial investment that offers the potential for growth and higher returns. Bonds are investment securities that offer higher interest income. The average investor needs growth and/or higher income to get ahead financially. The question is: how should the new investor approach the subject of making a securities investment? Here’s a basic investment guide. First, learn the investment basics in regard to stocks and bonds. Then start investing in mutual funds.

When you invest in these funds professional money managers pick the stocks and bonds for you and a large pool of other investors. They manage the money. You just pick the fund(s) you want to invest in. The new investor belongs in stock funds, bond funds, money market funds, and/or balanced funds; and not in the likes of complicated and risky derivatives like stock options, swaps, and leveraged or inverse ETFs that invest in derivatives. The mutual fund industry is regulated to protect investors against fraud. Some of the more exotic securities are more difficult to regulate, as proven in the financial crisis of 2008.

A retired financial planner, James Leitz has an MBA (finance) and 35 years of investing experience. For 20 years he advised individual investors, working directly with them helping them to reach their financial goals. Jim is the author of a complete investor guide, Invest Informed, designed for average investors or would-be investors of all levels of financial background and experience. To learn more about investments and investing and his new financial guide go to http://www.investinformed.com.

I am often asked why I prefer the mini-Dow over the S&P Emini. While any index will do, I especially like the mini-Dow index.

Because of the faster movement of the Dow versus the S&P 500, the mini-Dow more closely follows it’s big board parent.

So if it is just a matter of speed, then the mini-Russell would be even better right? Not exactly. The problem with the Russell is the low volume. This will no doubt change in the future. The mini-Dow had too low a volume for my money just a couple years ago, but that has now changed.

One more reason why I prefer the Mini-Dow is that I like no-cost tools, and it is much easier to find a reliable Dow chart. In fact there are many free-online charts that work just fine.

No matter which Index you prefer, I feel it is an advantage to watch the big board chart, and not the mini chart. I also prefer the 5 minute time frame. (the one minute time frame can help with entries at times, but be careful, it can give many head fake moves too).

Many traders watch both, which is what I did years ago before deciding to focus on the big board. Here’s why. I found that I would not move on what the mini chart was telling me unless I confirmed it with the big board. A popular confirmation among traders. It finally hit me that if I would not make a trade without confirming it with the big chart, then why did I need the mini chart at all?

When I dropped the mini chart and focused on the big board movement, my trading improved. I have since confirmed this strategy with Hundreds of my students and other traders. Just recently, one of my students who moved on to using the mini-chart (a paid service I might add), came back to our style and is now focusing on the no-cost big chart we use. He also confirmed that his trading improved, and he now sees why I focus on the big one.

The mini chart (even in the 5 min time frame) is like trading with a 1 minute chart. There are too many head fake moves that get you in a trade before it has fully developed. The big board averages some of those moves out for you. It keeps you on the sidelines when you should be. Sure, you might not get in as early on some runs, but in the long term it will save you!

It is difficult to catch any move from top to bottom or vice-versa, but by watching the big board you can fairly easily get a nice chunk out of the middle. A few nice chunks a week will keep you from needing a bail out plan!

Doug West has worked in Financial Planning and Investment training for over 20 years. Listen to his online radio show at:

Forget day trading stocks and learn how to trade the mini index!

Good investments are always out there, but investment opportunities are not always easy to find. What’s important is that you find a good investment that fits your particular needs. This can be tricky business because it’s all a matter of trade offs, and most people don’t know investment basics.

A good investment for your friends might not be a good investment for you. For example, you don’t want to place bets on a penny stock in an account earmarked for future college expenses. Penny stocks are not investment opportunities; they are speculation.

Believe it or not, many people follow the lead of a friend when making investment decisions. They want to invest money where Ralph did because, according to Ralph, he made a lot of money in investment opportunities he found. As a financial planner I ran across this time and time again from new clients that were referred to me by existing clients of mine.

Here are the investment basics. You can’t have it all in any one investment. If you want growth (higher returns), you trade off safety. If you want high income or safety, you trade away high growth prospects. If you want the tax breaks offered by a retirement plan, you give up high liquidity (quick and easy access to your money without penalties).

So, when looking for good investments, make sure the investment fits your needs. If your kid starts college in two years, a bear market in stocks could change his or her plans if you had the college fund invested in stocks. If you are saving for a down payment on a house, the same holds true.

Rank your financial needs before you invest in anything. Always consider these five investment basics: liquidity, safety, growth, income, and tax advantages. No investment ranks high in all five categories.

A good investment for you depends on the investment basics that best describe your financial needs and financial position in life. For example, an IRA or 401k plan is great if you want to invest and earmark money for retirement. But you don’t want all of your money tied up in stock funds in a retirement plan. What happens if you need cash fast for an emergency?

Don’t call Ralph’s financial planner and tell him you want what Ralph has. Instead, view every investment in terms of the investment basics. His investment opportunities might not be good investments for you.

A retired financial planner, James Leitz has an MBA (finance) and 35 years of investing experience. For 20 years he advised individual investors, working directly with them helping them to reach their financial goals.

Jim is the author of a complete investor guide, Invest Informed, designed for average investors or would-be investors of all levels of financial background and experience. To learn more about investments and investing and his new financial guide go to http://www.investinformed.com

I’ve been successfully trading the index over 7 years now. Some seem to think that this somehow has something to do with day trading stocks. Or, at least they try to compare it to stock day trading.

We prefer Index Trading. There really is no comparison to day trading stocks. With stock trading there are Many things you really need to know about the companies you will be buying or selling short. In fact, the majority of stock traders Never sell a stock short or bet against the company (which means you are betting the stock price will drop). Not being able to profit in a down trending market is a Major setback for an investor.

With Index trading we are only concerned with index movement. We don’t even care if it is going up or down. We just want the index price to move! We can place our trades short or long with equal ease. There is no market or company research to do, as we really don’t care what the individual companies are doing.

For instance, if you were looking at a company with the thought of buying stock, you would no doubt want to know what the PE ratio was, who the board members or major stock holders are. You should want to know if they are buying or selling. You might want to know what the BIG fund companies are doing in that sector (finance, health care, big pharma, tech sector etc.), and many other factors (or at least you should). Then you might use a chart to time your entry or exit strategy.

With index trading, it is all about the timing. You just want to know what the highest probability is for the next few minutes. Then you make your trade accordingly. If you have dependable data supporting your chart set ups, then you should take winning trades most of the time – Regardless of the fundamentals listed above!

You probably have realized that what is happening right now in the market is controlled by emotion. More correctly -traders’ emotion. We can tune into that emotion with simple set ups, and go for a short ride. We might even get into a long ride, but we are going to set up protection that will help us no matter which way it goes. When the index moves against us, we will get out fairly quickly. When it moves in our favor, we will let it ride as long as we can.

Now, if you just enjoy doing all that market research, go ahead. However, we have taught hundreds of stock investors to trade the index (mostly mini Dow and the S&P Emini), and the majority of them never go back to stocks!

Another advantage of index trading is the lower funding requirement. Stock day traders will need at least $25,000 in their accounts (depending on how many trades they make), where index traders can get started for $2,000 or less!

Index trading also offers a lot better leverage that stocks. The emini indices are comparable to the leverage of stock options, without all the headaches and limitations.

After the financial meltdown on Wall Street, I predict there will be MANY more investors looking at index trading as a Great alternative to stocks!

Doug West has worked in Financial Planning and Investment training for over 20 years. Listen to his online radio show at:

Forget day trading stocks and learn how to trade the mini index!

If you want to stay alive long term as an investor, trader, or even in business, you MUST learn to manage your risk!

In business that might be your expenses, or knowing how much you will spend on advertising (especially with untested sources). You keep track of things so that you don’t keep throwing good money after bad. In other words, if you track your advertising results (which you MUST do), and a certain campaign is not working – you scrap it and try something else. For those ad ideas that are working, you keep doing them, and stop when they quit being effective.

For those of us involved in index trading (or any type of market trading for that matter), it is even more simple. We MUST know before we go into a trade, how much we are willing to risk or lose on it to see if it works. Even if we are going to average, we still need to calculate it out. How many times will we average, what is my max loss. Once you know that figure, it may determine how many times you can average (place additional orders to improve your entry point).

The market may change and dictate that we get out early, but it MUST never dictate how big our loss will be. In other words, we NEVER let a small loss turn into a big one. It would be like throwing money away on advertising that does not work.

Most folks (especially those who have been ingrained with the buy and hold mentality) keep holding losing trades until they become catastrophic losses. A huge losing trade that wipes out their account (or 50% or more of it – which is exactly what happened to most stock investors with the mortgage meltdown fiasco).

Learn to keep your losses small and be ready to trade another day. Some traders shut down if they have two losing trades in a row (some days, you are just not in the zone!).

Risk To Reward Ratios

Most “experts” will tell you to calculate the risk-to-reward ratio before you get into a trade or investment. In my opinion, they are almost impossible to calculate. My first rule of trading is that in the market “Anything Can Happen at Any Time”. So how will you know what a trade could do or what the potential reward is? Whose formula will you use to calculate it?

I’ve heard “experts” claim you need at least a 2 to 1, others say a 3 to 1, or even a 5 to 1 or better reward ratio, or you should NEVER even open the trade! That simply means that you should not enter a trade unless you can make double the money you may ultimately lose on it (for a 2 to 1 ratio). While it is a good idea in theory, it would keep me out of a lot of really good trades (for one thing, I know that nobody can be sure what the market will do -anything can and does happen).

While you should be looking for highly probable moves that have the potential to turn into NICE runs, the truth is, you NEVER know what is going to happen. I’ve seen traders take losses on trades that were once in profit simply because they were holding out until some arbitrary reward ratio was met.

We teach our traders to get into a highly probably move and then lock in some profit and see what happens! Once you have nothing to lose (by locking in some profit), and a HUGE potential upside, you can’t really go wrong. As traders we should WANT to be in that position as often as possible. Sometimes we even get our targets out of the way and let the winning trade RUN! Forget about holding onto a trade until some calculated ratio is reached.

On any chart you look at there are floors and ceilings that are easy to see. You must take note of them and trade according to what “might” happen. However, if you lock in profit as soon as you can, you will be way ahead of the guy that is looking for some magical reward ratio.

Calculate How Much You Will Earn

Just as important as calculating your max loss on any one trade, is knowing when to shut down for the day. A daily profit goal can help. It can also help you to formulate your plan for trading.

It would be good if your max loss was less than your daily goal, then one loss would not ruin your day.

Sure, there will be days when you don’t reach your goal, but there will be days when you surpass it, because you stuck to your plan, and locked in profit when you had a chance. Many days I have several little trades, and then one nice run and I’m done.

An Advanced Move

This is not for beginners. New traders should get in and take whatever the market is offering by locking in profit as mentioned above. However, once you account size has grown, it opens up more options for you, like the move I’m about to describe.

Let’s say your goal is $1,000 a day in your trading. For this example, let’s say you are trading the mini-DOW (my favorite index). The mini-Dow is worth $5 per tick. So, if you start with 10 contracts, you would need 20 ticks to get to your goal of a grand for the day (we will ignore the broker commissions since they are really small anyway).

First, you look for the highly probable set up you want. When it appears, you open the trade with 10 contracts. If it moves 20 ticks in your favor, you are done. However, if it moves against you (a back tick), you average up to 20 contracts (by adding 10 more contracts to your trade at a new entry point). Now with 20 open you will need just 10 ticks to get to $1,000. If you average up to 40 you will need just 5 ticks. If you go up to 80 you will need 2.5 ticks.

Again, to pull this move off, you would have to have the DEEP pockets required. You could do the same thing with a $100 daily goal and starting out with 1 contract. In either case you MUST have the risk calculated. At some point you could use averaging to get to your acceptable loss level.

Risk-to-reward traders would probably never do this move. However, if you have the experience, and account size it is fairly easy to do. Some days you could be through in a few seconds.

Whatever style of trading or business is right for you, learn to calculate your max loss on any one deal, and you will be MILES ahead of most folks who never think in these terms. Remember, you MUST manage risk to win at anything!

Doug West has worked in Financial Planning and Investment training for over 20 years. Listen to his online radio show at:

Forget day trading stocks and learn how to trade the mini index!