Investors LOVE to talk about maximizing returns

But how do you limit your losses?

Here are 3 easy steps any investor can incorporate in their strategy

- A THREAD -

Like all investments, there's a risk involved

But the most successful investors are the ones who are able to limit their losses over the longest period of time

It won't always be sunshine and rainbows

Nor should it be

But how exactly can you do it?

There are 3 important steps to take to limit your losses:

1) Use a Stop-Loss Order

2) Market Hedging

3) Awareness of Material Changes

Let's take a look at what they are...

1) Using a Stop-Loss Order

It's an order placed to buy or sell a specific stock once it reaches a certain price

Why is it useful?

Because it limits your loss in the event that the stock price drops

And the best part is that it executes without you having to do a thing

Let's say you bought stock ABC at $20

And you wanted to limit your loss to 10%

If the stock price dropped by $2 (10% of $20)

The order would be executed and you'd be able to get out of the position without taking on more of a loss

2) Market Hedging

There are so many ways to hedge your portfolio but the easiest example to understand relates to gold

What happens when the economy tanks?

People look for other ways to hold something of value

So they typically flock to gold...

If you want to protect your equities from market downturns

Add some exposure to gold in your portfolio

When one goes up, the other usually goes down

And vice versa

3) Awareness of Material Changes

What's a material change?

It's a change in the business that is expected to have an impact on the market value of its securities

When there's a material change...

Make sure you reevaluate your position

Examples of material changes:

- Changes in ownership
- Changes in the direction of the business
- Anything that changes the make-up of the company

These changes could be for better or for worse

So make sure you're aware of how they'll impact the value of the company

Lastly...

If you're interested in building a dividend portfolio so you can create your own paycheck

Or just have a general interest in how they work

Grab my FREE guide to Dividend Domination here http://bit.ly/DividendDominationn