PostHeaderIcon Beating The Market

Successful TraderSuccessful trading is always about trying to beat the market. Being able to read and try to predict market actions before they happen can determine how successful one becomes as a trader. Here are some simple tips on how you may be able to stay strong and beat the market as you try to build a successful investment portfolio.

Keep Turnover And Expenses Low

In any type of business or trading endeavor, one of the keys to staying strong as well as long in a certain market is by trying to keep turnover and expenses as low as possible. Turnover, in this case, refers to the frequency of buying and selling of investments. The more frequent you try to buy and sell your investments, the more of the so-called frictional expenses you accumulate. Such expenses include commissions you pay to brokers, capital gains taxes, management fees and other charges that can considerably eat up quite a portion from your overall return.

Minimize Risks

Another way to beat the market is by trying to minimize the risks as much as possible. This includes choosing the right investments. In stocks for example, it can be easy for some investors to place their money on something that may have a little chance of success. Sometimes this can happen when investors sometimes try to follow what others are trying to do- invest in something out of pure speculation. Doing so can prove very risky.

One of the easiest ways to minimize such risks is by avoiding investing on something that you don’t understand. One way to determine this is by trying to understand how the company earns profits, where it gets them and who its main customers are. If you can’t quite answer these simple questions, then you don’t quite know about the company and should avoid investing in them before you get to know them better.

Take The Value Investing Approach

A good approach to investing to beat the market is giving importance to value. Just as you want to make your investments grow, you have to know fully well just how your investments would do it for you. This will include getting the underlying value of each investment and determine how it will be able to offer the kind of growth that you expect. Taking a chance on just the popular options today would not serve you well. You may have to look into each type of investment available and look into their underlying value. This will help you further determine each investment’s worth and see if its price today in worth your money in exchange for their potential earnings in the long term.


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