Make Consistent Gains In The Market

A lot of you have written asking, “How can I make consistent gains in the stock market?” Ask, and ye shall receive.

The first thing you need to do is get rid of FEAR and GREED. These two emotions will get into your head, mess with your thinking, and the result will be that you make wrong decisions on when to buy and sell. Once you get rid of fear and greed, you will begin to make consistent gains.

In order to rid yourself of fear and greed, you need a concise trading system of when you get in and when you get out, and you just stick with it. It won’t matter what you hear on TV or in the news. If you stick with the proven system, then your mind should not be swayed. To do this, you need to know when you are going to buy a stock, or when you are going to sell it, BEFORE you even buy said stock. You also need to know where on the upside you will sell, and where on the downside you will sell. Use a stop-loss to protect yourself from downside risk.

In order to pull all this off, you need a system in place. You can not just go out there guessing where the buy price is or guessing where the sell price is. That is not the way to make consistent gains and steady profits. You can’t just guess on what is going to work.

How To Make Consistent Gains

I tell my students, that before they even place a trade, they need to develop their signals for buying and their signals for selling. I ask them to write it down on paper. If they can not write it down on paper, then they don’t have any rules and that is a recipe for failure. If you can write your rules down on paper, then you can follow it and you can duplicate it. If it’s a winning system, you definitely want to be able to duplicate it. That’s how you make consistent gains in the stock market. You want to make stock investing nothing more than a numbers game, remove all the emotions out of it.

OK, so you have a signal that tells you when to buy. Write it down on paper. You have a signal that tells you when to sell. Write it down. Now with your rules written down, all you have to do is go back in history and test it. We call this “backtesting”. See how well your signals worked. You will know exactly what your win percentage is. You will know exactly how much each winners gains. You will know exactly how much each loser loses.

Make Trading A Numbers Game

For example, my Index Trading Strategy averages 2 out of 3 winners over the last seven years of trades. Each winner gains 15%. Each loser loses 7% on average. On every three trades I should get these results: +15%, +15%, +7%. Ignoring compounding that comes out to 15 + 15 – 7 = 23%. Every three trades I should gain 23%. Repeat that four times a year = 100% annual return. That’s how you make consistent gains.

Now it is possible I could go with three losers in a row. That only means, on average, I should now have 6 winners in a row. Consistency. There are losing streaks, you just need to have faith and be consistent and keep repeating what works to make consistent gains in the stock market.

The numbers for your system may be different. If you win only 1 out of 10 trades, and the losers lose 5% while your winner gains 100%, that’s still a great profit after 10 trades. Just keep repeating it over and over. Don’t focus on losing trades, they are part of the game. Focus on returns.

To recap. Write your signals down. Go and backtest them. Figure out the winners gains, the losers loses, and the winning percentage. If the numbers add up and it’s very profitable. Just keep doing over and over for steady profits and you will have your consistent gains.

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