In the long run, the investment portfolio must grow. The end result is of utmost importance. History shows that great investors are right only 30% or 40% of the times. Too much faith must not be put in trading strategies and track records that boast of 90% winning stock trades for they result in a paltry amount of money per each stock trade.
One must be ready for a long haul in the bull market. The first rally in a bull market must not be sold in a hurry for it may lead to losses .Investors should logically buy those shares which show strength and sell those which show weakness. In bull markets, one must add to the trade on minor corrections back into support levels. In bear markets, one must add on corrections into resistance. The 33-50% corrections level of the previous movement or the proper moving average as a first point in which to add must be used.
Those who follow a 'bottom up' strategy pick specific stocks focusing on financial analysis. Portfolio managers who follow a 'top down' stock strategy where they seek to achieve a balance in the weightings of various sectors in their portfolios will look into different market trends before making a trading decision. Sales traders manage equity orders for their clients and aim to achieve the best prices.. Technical traders on the other hand try to predict future stock prices on the basis of movement of stock prices. They pay attention to recurring patterns of stock price movements and trends. At the end of the day, risk minimization is the driving as well as defining motive.
Interestingly, small losses are the best losses. One must not to stick to losing trades or add to it. The buy prices in case of buying must be progressively higher. The formula is the opposite while selling.
