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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 -
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?
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) 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
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
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...
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
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
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
- 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
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
