Wealthy Investors Don’t Make These 3 Mistakes

Successful investors aren’t flawless. But they become successful investors because they avoid certain mistakes that amateur investors commit over and over again.

I’ve labeled these mistakes “Profit Killers” because that’s exactly what they do: They rob your portfolio, kill your profits and hurt your chances of long-term success.

In this article, I’ll show you the top 3 mistakes wealthy investors avoid so you can potentially make (and keep) more of your investments.

Profit Killer #1) Clinging to outdated Buy & Hold strategies

Listen, “Buy & Hold” is way past dead.
20150702_inside-01Here’s a chart of the average buy and hold potential over the 10 year stretch from 2001 to 2012. Yes, you’re reading it correctly – that’s a 0.0% gain.

While buy and hold may have been a viable strategy 40 or 50 years ago, in today’s market following a buy and hold strategy can cripple your portfolio and leave you holding the bag for years and years of lost profits. In short, buy & hold leaves too much to chance. If you employ a buy & hold strategy and you happen to be lucky enough to use it the right decade, you might come out all right.

But if you happened to be unlucky enough to use a buy & hold strategy anytime in the last 20 years, you probably watched your account get hammered while valuable time just kept slipping away.

Profit Killer #2) Holding on to losing trades too long

It’s a common mistake because nobody likes to be wrong. So you make a trade with one expectation in mind and when the opposite happens, you don’t want to admit you were wrong.

You tell yourself the market is going to turn around. And you wait. You wait. And you wait some more. With each passing day you continue to lose until finally you reach the “enough is enough” moment and you get out of the trade.

The solution? Always trade with a stop-loss order at a pre-determined exit point. Here’s a little trick on figuring how to set your stop loss order. Find the lowest low of the past 4 days and place your stop loss order just below the lowest low.

So if you’re considering buying a stock at $10 on Friday, look at the previous week’s price action and see what the lowest low was during the previous 4 days. If the lowest price during those 4 days was $8.90, then you’d want to set your stop loss order ½% below the previous 4 day low. To calculate that, just multiply 8.90 x 0.995 = $8.86.
20150702_inside-02So in this example, we’d set our stop loss order at $8.86. Just low enough to miss any dips that would trigger other traders stop loss orders, but close enough so that we aren’t going to risk too much of our investment is we’re wrong about this trade.

Of course on the flip side of this coin we have a similar profit killing mistake…

Your Next Move…

Losing too much on a single trade is just one of multiple mistakes that can wipe out your account. I call these mistakes “profit killers.”

I’ve created an unusual, 15-second quiz that will help you pinpoint and eliminate your own personal profit killers. It’s free for a limited time.

Start the quiz now.

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Profit Killer #3) Exiting winning trades too soon

Just as it’s tough to let go of a losing trade, it’s just as difficult to stay with a winning trade. After all, most people are in a hurry to turn those “paper” profits into real profits. Emotionally, it can be tough to stay “hands off” on a winning trade because there’s nothing worse than watching a winning trade turn into a loser.

Again, the key is to take the decision out of your hands before you even get into the trade by following a cut-and-dried strategy.

Step #1: Place your initial stop-loss order at the same time you buy in using the strategy from the Profit Killer #2 section of this article. If the market moves against you, you will lose a small percentage of your investment when you get stopped out and then you can pursue other trades.

Step #2: But if the market goes up, then your next move is to adjust your stop loss order to the point where you bought it. So if you’re buying at stock at $6 and it moves up to $7, you’ll want to move your stop loss order up to $6. This essentially gives you a “free trade” since now you can’t lose, you can only win.
20150702_inside-03Step #3: As the market continues to climb, you continue to move up your stop-loss order thus allowing you to lock-in profits as the stock continues to climb.

IMPORTANT: You don’t decide to exit the trade. You wait until the market moves against you and automatically triggers your stop loss order. By trading in this manner, you ensure that you get the “middle third” of the move.

20150702_inside-04By the way, the concept of capturing the “middle one third” of the move comes from multi-millionaire trading legend Bernard Baruch.

He said:
“Don’t try to buy at the bottom and sell at the top. It can’t be done, except by liars.

I can’t help making money. I just wait for the market to bottom. Then I buy on the way up, and then I sell before the top.

I’m satisfied with the middle one-third of the move.”

If you can sidestep these 3 mistakes, you’ll improve your odds at doing what the vast majority of traders fail to accomplish: Make money in the markets.

But there are actually 4 more “Profit Killers” you should know about. To see the full list of profit killers and to pinpoint exactly which profit killer is preventing you from the success you deserve, check this out:

15-Second Quiz Pinpoints Your Personal “Profit Killer”
and Reveals How To Fix It
(It’s free)

Why I Refuse To Place A Trade If I See THIS…

20150630_inside-01Before you click “Place Order” on your next trade, there’s one thing you should look for.

Ignore this tip and you’ll forever be forced to accept returns far below what you could be taking home.

But if you use this simple “last minute” check before you make a trade, you’ll see an immediate improvement in your results.

20150624_inside-01My name is Bill Poulos and I’ve been trading the markets since 1974.

My early results were hit or miss. But once I discovered this “last minute” check I’m about to show you, things turned around for me.

And not just for me…

Here’s what one of my students had to say about this devastatingly simple technique:

Did you catch the key phrase in that?

“Deliberately-Trading Markets”

Your Next Move…

Losing too much on a single trade is just one of multiple mistakes that can wipe out your account. I call these mistakes “profit killers.”

I’ve created an unusual, 15-second quiz that will help you pinpoint and eliminate your own personal profit killers. It’s free for a limited time.

Start the quiz now.

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What Is A Deliberately Trading Market?

Have a look at this chart. See how smooth it looks?
20150630_inside-03I’m not talking about whether you think the price action will continue to move up, or if you think it will reverse direction.

But notice how the general “movement” of the chart is smooth.

Now let’s compare that to what you see on this chart:

20150630_inside-04Notice how this chart is choppy. Erratic.

There are wild swings up and large moves down.

You have gaps in prices. You have a helter-skelter kind of price action. From one day to the next, you don’t know if this market is going to go up or go down. You don’t know what’s going to happen. It looks like an electro-cardiogram where it just bounces back and forth, all around.
This kind of price action spells risk. It is definitely not a market that is in motion and staying in motion. It’s a market that’s encountering opposite forces all the time, day in and day out. You want to stay out of this kind of market.

There’s no need to trade this kind of market when you can trade a deliberately trading market. So what most people do when they try to make money in the markets is they just pick or follow someone else’s recommendation without regard to understanding deliberately trading markets.

And even if they have a proven trading plan, the odds are stacked against them if they attempt to trade non-deliberately trading markets. But if they only trade in markets that are deliberately trading, the odds are overwhelmingly in their favor.

So before you click the “Submit Order” on your next trade, review the chart and give yourself the benefit of a final check to see if you price action is deliberate or non-deliberate. This simple technique could be the breakthrough you need to take your portfolio to the next level.

The Curious Case of the “House Money” Investment Tip

20150626_inside-01Here is a strange tip you can use to increase your potential gains while slashing risk to practically zero.

It’s called the “House Money” investment tip and it works if you trade stocks, ETF’s, options or almost any other investment vehicle.

Very few traders know how to properly execute this strategy.

So read every word of this strategy now and consider putting this into practice before your next trade:

“Most People Fail Because They Don’t Know
The Right Way To Be Wrong.”

Almost anybody can handle a winning trade. That’s easy. Just look back to the 1990’s when “dot com” boom when everybody thought they were a trader because the markets kept soaring up. Even a blindfolded monkey could have made a fat return back then, but you know how this story ends.

Nearly everybody watched their accounts get crippled practically overnight. Some even lost their life savings or had to push off their retirement plans further down the road. All because they did not know how to handle the losing trades.

Fact is, nobody is right all the time. Nobody. The key to long-term success is knowing the right way to be wrong. It starts by using a simple tool called a “stop loss” order. (Note: If you’re thinking you’ve heard all this before, stay tuned because I’m going to show you a new way to use the common stop loss order.)

Your Next Move…

Losing too much on a single trade is just one of multiple mistakes that can wipe out your account. I call these mistakes “profit killers.”

I’ve created an unusual, 15-second quiz that will help you pinpoint and eliminate your own personal profit killers. It’s free for a limited time.

Start the quiz now.

(A new window will open so you won’t lose your place on this page.)

Basic Stop-loss Strategy

20150626_inside-02Here is the basic stop loss strategy. If you buy a stock at $10 and price drops, you could lose your entire investment.

But if you buy a stock at $10 at place a “stop loss” order at $9, the most you can lose is $1.

I’m guessing most people are familiar with this concept.

So let’s jump right to the next level and talk about the “House Money” strategy.

I’ll walk you through that now:

20150626_inside-03At the same time you buy your stock, you’ll place your initial stock loss order 5.1% below your buy-in price.

So if you buy in at $10 per share, you’d place your stop loss order at $9.49.

By the way, the reason we place the stop at 5.1% below is because a stock will often drop 5% in price and the come roaring right back.

If the stock drops down to $9.49 or lower, you’d be stopped out and you’d only have lost 5.1% of your investment. You’d live to play again another day.

But if the stock moves up, that’s when the “House Money” strategy comes into play.

Take a look:

20150626_inside-04Once the stock moves up, you move your stop loss order up right along with it.

This eliminates your risk and ensures you can’t lose any money on this trade – you can only win.

In other words, you just gave yourself a “free trade” as you are now playing with “house money.”

As the stock continues to rise, you continue to move your trailing stop loss order up right along with it. How fast the market is moving will determine how often you move you stop loss order.

20150626_inside-05You’ll want to keep your trailing stop loss order just below the new recent lows.

This is so you don’t get prematurely stopped out by minor pullbacks.

In this example, the trailing stop loss is placed below new recent lows; therefore, locking in a 2.0% profit on the trade.

As the stock continues to move in our favor, we continue to move our stop loss order up.

20150626_inside-06In this example, the stock continues to move and by the 8th day of the trade we’ve locked in a 6.6% profit.

Not bad for just over a week’s work!

As you can see from the chart above, eventually the market reverses direction and we get stopped out of the trade.

We don’t know when we’re going to get stopped out of the trade. But, thanks to the “House Money Strategy” we know that whenever we get stopped out, we’ll be in the black because we were playing with “House Money” the whole time.

How To Go After Triple-Digit Gains When Apple Announces Earnings On July 20th

Apple Earnings Announcement

Here is a simple trade that gives you the opportunity to go after triple-digit gains every time Apple (and other popular companies) announce their quarterly earnings.

Pictured here are the results from the last six times this strategy was used in the past year and a half. As you can see, it doesn’t always work.

But, when this strategy doesn’t work, you only sacrifice a small amount of capital. And when this strategy does work…well, the numbers speak for themselves.

I made this short video that shows you exactly how to copy this strategy AND the 10 best stocks to trade using this strategy.

*Note: It goes without saying that all trading carries risk of loss and never trade with money you can’t afford to lose.

Why Are You Still Making This
Profit-Killing Mistake?

Now that I’ve shown you how to hopefully make a profit when Apple announces their earnings, let me show you the #1 profit killing mistake you’re currently making, and how to fix it immediately.

Show me my profit-killing mistake now…

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Why Rich People Obsess Over This Ancient Symbol

Did this ancient symbol, first discovered back in 1339, unlock the key to wealth?

The poor and middle class seem to focus all their energy and attention on the almighty dollar sign symbol: “$”.

But the wealthy know better…

The richest of the rich will IGNORE the common $ symbol and focus exclusively on a very different symbol. Perhaps you’ll recognize it.

Here’s how the symbol looked when first discovered in 1339:

In 1425, this powerful symbol took on a different form:

By 1684, this strange symbol had evolved into something similar to its modern day form:

If you’re still having trouble figuring out what this symbol is,20150625_inside-05
take a look at your keyboard.

There, right on the number 5 key, you’ll see the 600 year old symbol in its modern-day form.

What Rich People Do Differently

Some experts believe you can sum up the difference between a poor person’s mindset and a rich person’s mindset with this simple phrase:

Poor people focus on $. Rich people focus on %.

This is especially true when it comes to investing.

For example, if you have a $10,000 account, and you lose $2,000 in the stock market, it hurts!

If you have a $100,000 account and you lose $10,000 in the stock market, it hurts too!

But, if you have a $1,000,000 account, and you lose a massive $50,000 on a single trade, it doesn’t sting quite so bad. Why is that?

It’s because, even though the million-dollar trader lost the most $, he lost the smallest % of his account.

One More Thing…

There’s another thing rich people do differently. They ruthlessly identify and eliminate “profit killers.”

This unusual, 15-second quiz will help you pinpoint and eliminate your own personal profit killers. It’s free for a limited time.

Start the quiz now.

(A new window will open so you won’t lose your place on this page.)

The small-time trader risked (and lost) a whopping 20% of his account on a single trade. At this pace, he’ll be wiped out in no time!

The middle-class trader risked (and lost) 10% of his account on a single trade. Not quite as bad, but still too large when you consider it’s completely realistic to lose 4-5 trades in a row.

On the surface, the wealthy trader lost a bundle. $50,000 gone in single trade! But because he risked just 5% of his account, he lost only a small percentage and will “live to trade again.”

The lesson is clear: The key to building long-term wealth is to focus on percentages, not dollar amounts.

After 40 Years Of Trading The Markets, Here’s My #1 Piece of Advice…

My name is Bill Poulos. I started studying the markets back in 1974. Here it is, over 40 years later, and I’m still trading. Over the last 4 decades, I’ve figured out some important points and learned some hard lessons when it comes to making money in the markets.

Without further ado, here is the single most important piece of advice I can give to anyone who wants to start trading the markets…

“Never, ever, ever, ever, risk more than
‘X’ on a single trade.”

It sounds simple, but it’s probably the single biggest mistake I see traders make over and over again. Most people never expect to lose. But the law of probabilities states that, not only will you have losing trades, there’s a very real possibility you could lose five trades…IN A ROW!

The average person who loses 5 trades in a row will see their account completely wiped out. But if you follow my #1 piece of advice, you can avoid crippling losses and keep your account balance sitting pretty, even if you hit a rough patch and end up losing 5 trades in a row.

Luckily, you don’t have to guess. You can use my “plug-and-play” calculator to figure out exactly how much you can risk on your next trade.

Your next move…

Losing too much on a single trade is just one of multiple mistakes that can wipe out your account. I call these mistakes “profit killers.”

I’ve created an unusual, 15-second quiz that will help you pinpoint and eliminate your own personal profit killers. It’s free for a limited time…

Start the quiz now.

(A new window will open so you won’t lose your place on this page.)

Profits Run Position Size Calculator

Here’s a position size formula calculator you can use right now. Go ahead and play around with it.

And here’s how it works…

First, start with your account size. For example, let’s say it’s $30,000.

Next, plug in the maximum percent of your entire account you’re going to risk. If your account is less than $5,000, risk no more than 5%. If your account is greater than $5,000, risk no more than 2%.

So, in this example, we’d use 2% of $30,000, or $600. This is the maximum amount you plan to lose if the trade is a loser.

Now, if this were a long trade, that doesn’t mean you’d buy only $600 worth of a stock, you’d actually buy quite a bit more. But what this does mean is that you want to have, no more than, $600 at risk through the prudent use of a stop loss order (we discuss this in Step 5 below).

But, for purposes of this example, let’s say the planned entry price of the stock you want to trade is $20, and you plan on putting your stop loss order at $18. This means that, if the stock dropped to $18, your position would automatically be sold with just a $2 loss per share ($20 minus $18).

So you’d plug in $2 in the “Planned risk per share” field of the formula, and then divide your $600 planned risk by $2, to get the maximum number of shares you should trade, which would be 300 in this example.

So if your entry price is $20 and you can buy 300 shares, you’d be putting $6,000 into this trade. But, because you have a stop loss order set at $18, your maximum loss would be only $600.

That is a very powerful concept that eludes most people. And if you do nothing else but apply this one concept, you’ll be positioned to totally avoid the account-crippling losses that wipe out most traders during big market crashes.

The Embarrassing Truth About Fibonacci Trading

20150623_inside-01Is it true?

Did a 13th century mathematics genius really unlock the secret to beating the markets today?

That’s what most of the Fibonacci trading “gurus” would have you believe.

But what’s the truth?

Can Fibonacci signals really give you an edge? Or are Fibonacci’s methods just marketing hype?

20150624_inside-01In this article, I’ll give you a simple and straightforward explanation of what Fibonacci signals are, and the truth about how effective they can when it comes to trading today’s markets.

By the way, my name is Bill Poulos, and I’ve been trading the markets for over 40 years now. So I’ve seen, pretty much, everything when it comes to new (and very old) systems that can, allegedly, help you “beat the market.”

Your Next Move…

Losing too much on a single trade is just one of multiple mistakes that can wipe out your account. I call these mistakes “profit killers.”

I’ve created an unusual, 15-second quiz that will help you pinpoint and eliminate your own personal profit killers. It’s free for a limited time.

Start the quiz now.

(A new window will open so you won’t lose your place on this page.)

What Are Fibonacci Numbers?

20150623_inside-02Fibonacci numbers are numbers that follow a specific integer sequence:

1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144…

20150623_inside-03As you can see, this numerical sequencing creates what’s called a Golden Spiral and because this spiral is seen so often in nature, many people believe there is something special about Fibonacci numbers.

Ok, But How Do Fibonacci Numbers Help You Make Money In The Markets?

Short answer: They don’t. Most software these days will include Fibonacci retracement levels and Fibonacci extension levels. These levels are calculated using Fibonacci numbers in the following manner:

This series of numbers is derived by starting with 1 followed by 2 and then adding 1 + 2 to get 3, the third number. Then, adding 2 + 3 to get 5, the fourth number, and so on.

The ratios are derived by dividing any number in the series by the next
higher number, after 3 the ratio is always 0.625. After 89, it is always 0.618. If you divide any Fibonacci number by the preceding number, after 2 the number is always 1.6 and after 144 the number is always 1.618.

Additional ratios were then derived to create ratio sets as follows:

In theory, you use these retracement and extension levels to predict where the market will go next.

But The Reality Is This…

Fibonacci levels are a widely available tool. Nearly every trader on the planet has access to this information and these Fibonacci levels. So even if they did offer some kind of advantage, everybody else has the same advantage too. And if everybody has the same advantage, than nobody has an advantage.

Successful traders don’t rely on tools or hype. If there’s any “big secret” it’s that successful traders don’t make the same mistakes that average traders make.

Check out this free quiz to identify your #1 profit-killing mistake and start eliminating it right away.

Sneaky Way to Trade Expensive Stocks for Pennies on the Dollar

Have you ever wanted to trade higher-priced stocks because they looked good, but didn’t have the funds to trade them?

Wall Street analysts love to talk about stocks like: Facebook, Google and Apple. But, despite their impressive pedigree, there’s one problem with these types of top-level blue chips.

With a price-point north of $50, $100, or even $500 per share, your average investor doesn’t have the bankroll to purchase very many shares of these or other high-priced stocks, which, of course, greatly reduces your profit potential.

Well, there is a way that you can trade those expensive stocks…on a budget. “How?” you ask?

By trading Options…

Trading options is like trading stocks, but at a much lower cost. In our article today, we will discuss how you can trade these higher priced stocks with a small trading account.

Many people have heard of ‘Options Trading’, but only a relative few actually know how to trade them. Simply put, trading options can help you leverage the money that you have by controlling the stock with a fraction of the money it would cost you to buy the stock.

For example, let’s say you wanted to buy XYZ stock that is $250 per share. If you bought 100 shares of XYZ stock, it would cost you $25,000. Obviously, this would not be possible if you have a small account of $2,500. But, if you were to buy a call option contract on XYZ stock, you might be able to control it for $500. This means you can take advantage of the higher-priced stocks without having to pay the higher prices. A term we use a lot when dealing with options is “leverage”. As we just mentioned, when trading an option, we are able to control a lot by using a small amount of money. This is what leverage is all about; we leverage our money so we can control more of the underlying stock, but using less of our money.

Win More Trades Than You Lose By Eliminating This 1 Thing?

There are things you do when you trade that absolutely sabotage your chances of building wealth. We call these the “Profit Killers” & there are 7 of them. Our free, 15-second quiz will reveal your #1 “Profit Killer” & then show you how to fix it.

Click Here To Take The Quiz To Discover &
Fix Your #1 “Profit Killer”

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Let’s clarify a couple of things…

First of all, when you buy an option contract on the underlying stock, you don’t actually own the stock.

In our example, if you bought XYZ stock, you would own it and could keep it for as long as you wanted. You could even pass it down from generation to generation as long as the company stayed in business. You would not make or lose money on it until these stocks were sold.

With a call option on XYZ stock, you don’t actually own the stock. You simply have the right to that stock if and when you choose to buy it. In other words, you have the “right” to buy the underlying stock, but you don’t have to; you are not obligated, in any way, to purchase XYZ stock.

Unlike a stock though, the option you have purchased will expire at a specified time. You can choose the amount of time you want, but it will generally be between 1 month and 2 years. After which, you will lose your right to the underlying stock. In addition, you will choose the “strike” price, which is the price you will have the right to purchase the underlying stock.

For example, if you want to buy a call option on the stock XYZ, you would need to determine how long you thought it would take for the price to reach the target you have chosen. If you thought it would take 3 months to reach it, you would buy an option that would expire after that time frame. You would also determine the price at which you would have the “right” to buy the underlying stock. If the stock was trading at $250 and you wanted the right to buy it for $240, then you would choose the “strike” price of 240. Now you would have the right to buy the stock at $240 any time before the expiration date you have chosen.

Taking this example a bit further, if you bought an XYZ November call option with a strike price of 240, while the price of the underlying stock price was $250, you would have an immediate value of $10. You would have the right to buy the stock for $240 and could turn around and sell it for $250. Because of this, you will need to pay a premium, if there is immediate or intrinsic value in the option, you would expect to pay a bit more than $10 for the premium.

The goal of trading options is to use less money, but be able to profit almost as much as you would if you bought the stock itself. In order to make money with a call option, you would need to see an increase in the price of the underlying stock.

For example, if XYZ stock moves up to $300 per share, the option premium would also increase. In our example, let’s say the November XYZ 240 call option costs us a premium of $20 and now the price of the stock moved up $50. How much would we make on the option? This can be a bit tricky to determine exactly, but we can use something called the delta, which tells us how much the option will increase for every dollar that the stock goes up. For example, if the delta for our option example is .70, this means that, for every dollar the stock goes up, we would see an increase in our option premium of 70 cents. We won’t go into more detail on delta, but just know that the higher the stock price goes up, the higher the delta will get. The highest it can go is 1. To keep things simple, if the delta stayed the same and the price of XYZ moved up $50, our option premium will go up 70% of that for an increase of $35.

So on a percentage basis, if the stock went up $50, you would make about 20% return. But with the option, you would have made about 175%. This is the power of leverage you can have when trading options. Take some time to review how trading options can help you trade those higher priced stocks that you might otherwise not be able to trade because of a small account size. In addition to trading these stocks as they go up, you can trade them as they go down also by using the leverage of trading put options.

Allocating too much of your portfolio on any single stock or option purchase is just one of 7 mistakes that can kill your results. I call these mistakes “Profit Killers.” This free 15-second quiz will help you pinpoint and eliminate your #1 Profit Killer.

Financial Crisis: Are You Just Going To Sit There?!

I don’t go on “rants” very often, but I’m finding it very hard to hide my anger about today’s current economic crisis. Let me start by talking to you for a minute about the economy and the financial situation in the world as it impacts you and your personal situation.

Let me ask you a few questions. How confident are you that the politicians will be able to bail us out of this mess that we’re in – this fiscal mess that we’re in? If you’re like me, you’re not very confident.

Because you see at the national level here in the United States, the total public debt is north of $15 trillion, the annual deficit, I think, is $1.5 trillion. Hard to keep track of numbers so big. Plus, the actual total debt of the United States is far greater than that. Interest rates are at an all-time low, and really at a level that’s unsustainable. That means the debt service, or the interest that the US government pays on that $15 trillion, percentage-wise, is at an all-time low. Can you imagine what happens when interest rates get back to normal? The interest on the debt alone will consume a very large portion of the federal budget…if we had one.

20150620_inside-01Now, what about the state level? Well, I know several states are in very dire financial straits. What about at the city level? Well, there are many, many cities, likewise, in dire financial straits. So how comfortable are you that the politicians on all those levels – I don’t care which party it is – are going to solve the problem? Remember these are the same folks that got us into this mess.

How about the banks? How comfortable are you with them? You know, the “too big to fail” banks that got bailed out? The ones that have yet to be bailed out, that we don’t even know about?

How about the future of the US dollar (which looks to me to be precarious?) And of course, I’m not alone in that view. When you’ve got these massive deficits that can never be repaid – you know, you could double the income tax rate, just double it, and we’d still run a deficit, an annual deficit in this country? That’s how far gone the finances are.

So let’s look to Western Europe. That must be a safe haven over there. Of course not! As you know, they’re in very serious trouble as well. Some are technically bankrupt, as well as the big banks in Europe. Many of them are in a precarious position. So there’s no safe haven over there.

What about the currencies in Europe? The Euro, the British Pound, the Swiss Franc? Well, none of them seem to be a viable alternative to the dollar. Actually, that’s what I believe is extending the viability of the dollar, because there are no good alternatives, except possibly gold and silver.

Well, why am I telling you all this? How does this affect your financial situation? Well, a lot of folks traditionally are in a diversified portfolio, “buy and hold” kind of mode. That’s been a proven approach to participating in the markets, trying to minimize risk and eke out a profit. However in the last ten years, the S&P 500 basically hasn’t moved. So ten years have gone by and the S&P 500 is right where it was. So if you were to have bought and held the right stocks to even do this well, you would be at break-even. After gut-wrenching months in the red…BIG time red, right? You went from 1500 S&P all the way down to 600. That’s a 900-point drop. You can do the math… that’s 60%. Who wants to sit through that? And, of course, it dropped, going back into 2000, a similar amount.

Then, we have a really nice rally again and we all start thinking everything’s going to be fine. Whoops! Nope. There’s another sell-off. This pattern continues over and over again.

The point is, if you’re going to rely on buy-and-hold in a diversified portfolio, you’re going to be disappointed. Certainly in the last ten years. Given all the financial stresses, the poor state of the economy all around the world… buy-and-hold is simply not something we can count on anymore.

Your Next Move…

Losing too much on a single trade is just one of multiple mistakes that can wipe out your account. I call these mistakes “profit killers.”

I’ve created an unusual, 15-second quiz that will help you pinpoint and eliminate your own personal profit killers. It’s free for a limited time.

Start the quiz now.

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Now, were there any opportunities though, in the stock market? Well, sure there were. You could say there were MULTIPLE places where you could have gone long or short pulling in lots of profit. The key is to not buy and hold but to trade. When the market is trending down, go short, and when the market is trending up, go long. It’s a simple as that. If you had done that from the beginning, you would have made a bushel of money, like many hedge funds did.

Buying and selling stocks is NOT what a buy-and-hold investor does. It’s what a trader does. And I think THAT is the solution to finding financial success in the world we live in today. Now traditionally, only a few people would consider themselves traders, or “swing traders,” where they trade in and out of the markets in a matter of days, or a couple of weeks at the most.

But given the state of affairs today, I don’t see how anyone can sit idly by and let the politicians try and solve these problems that they’ve not been able to solve up until now. And they’ve made matters only worse, year after year after year, regardless of party. If you’re going to rely on them, you’re going to be waiting a long time. In the meantime, would it be okay if the market dropped back down to 700? Of course it would not. I’m not saying it’s going to do that, but could it do that? Of course it could. What’s your plan in the event that occurs? If you’re buy-and-hold, you don’t have one.

Now, I love this, “I’m a long-term investor, so I don’t care.” Well, here’s another tidbit: When the market peaked in 1929, it took how long before it got back to break-even? What year do you think it was, when it finally got back to the peak of 1929? 1954. Twenty-five years. Now that’s a long time to be a long-term investor, just to break even.

Now, we still haven’t gotten back to the peak of ’00. 2000. On the S&P and certainly not on the NADSAQ.

So what I’m encouraging you to do is take control of your financial future. Learn how to become a trader. Now a lot of people think, “Oh, I don’t have time for that.” But if you trade daily stock charts, or daily Forex charts, or daily Exchange-Traded Funds charts, or daily gold and silver fund charts, or daily bond charts, you only need ten minutes a night. After the market’s closed. But what you do need is to take personal responsibility for your financial situation? You need to apply a disciplined approach to managing risk, first and foremost, and only then, going after profit. A good trading method will show you exactly how to do that.

So with that combination, what you can do is stop fretting and worrying about the future, take control and do well, no matter what happens. Whether the market drops off here like a stone, or whether it rallies nicely. Because, you know, we don’t know what the truth is. No one knows what’s going to happen. You can have all the smart people in the world forecasting for you, but the truth is, they don’t know. If they knew, there would be no market. And if they really knew, they wouldn’t be telling you.

So armed with a good trading method, though, you don’t care. Because a good trading method is going to have you on the right side of the market. So that you will never experience a sixty percent drop in your portfolio. In fact, you stand it on its head, you get short, and grow your portfolio.

Nobody Should Be Allowed to Invest Until They Read These Books

Market Wizards: Interviews With Top Traders
By Jack D. Schwager

How do the world’s most successful traders amass tens and hundreds of millions of dollars a year? The world’s top traders reveal the secrets of their phenomenal success. While their responses differ in the details, all of them can be boiled down to the same essential formula: solid methodology + proper mental attitude = trading success.

The New Market Wizards: Conversations with America’s Top Traders
By Jack D. Schwager

Another Schwager classic interviewing highly successful traders and what made them successful.

Trading in the Zone: Master the Market with Confidence, Discipline and a Winning Attitude
By Mark Douglas

What are the underlying reasons for lack of consistency? This book is all about putting what you know aside and trading what you see. It helps traders overcome the ingrained mental habits that cost them money.

Win More Trades Than You Lose By Eliminating This 1 Thing?

There are things you do when you trade that absolutely sabotage your chances of building wealth. We call these the “Profit Killers” & there are 7 of them. Our free, 15-second quiz will reveal your #1 “Profit Killer” & then show you how to fix it.

Click Here To Take The Quiz To Discover &
Fix Your #1 “Profit Killer”

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Trade Your Way to Financial Freedom
By Van Tharp

A comprehensive primary on the fundamentals of trading. “Sound trading advice and lots of ideas you can use to develop your own trading methodology.” – Jack Schwager, author of Market Wizards and The New Market Wizards

The New Trading for a Living: Psychology, Discipline, Trading Tools and Systems, Risk Control, Trade Management
By Alexander Elder

Successful trading is based on three M’s: Mind, Method, and Money. It helps you discipline your Mind, shows you the Methods for trading the markets, and shows you how to manage Money in your trading accounts so that no string of losses can kick you out of the game.

Come Into My Trading Room: A Complete Guide to Trading
By Alexander Elder

Expanding beyond the three M’s: Mind, Method, and Money, of his bestselling, Trading for a Living, Elder shifts focus from technical analysis to the overall management of a trader’s money, time, and strategy. This comprehensive trading guide provides a complete introduction to the essentials of successful trading.

Reminiscences of a Stock Operator
By Edwin Lefèvre

This book is the most widely read and highly recommended investment book ever. Generations of readers have found that it has more to teach them about markets and people than years of experience. This is a timeless tale that will enrich your life-and your portfolio.

Getting Started in Candlestick Charting
By Tina Logan

Would you like to gain an edge in today’s competitive markets? Then adding the candlestick methodology to your repertoire of technical analysis skills is essential. This book can help you achieve this goal, whether you’re new to chart analysis or looking to enhance your understanding of the approach.

The Complete TurtleTrader: How 23 Novice Investors Became Overnight Millionaires
By Michael Covel

Convinced that great trading, following a few simple rules, was a skill that could be taught to anyone, Richard Dennis (having made a fortune himself on Wall Street), made a bet with his partner and ran a classified ad in the Wall Street Journal looking for novices to train. His recruits had anything but traditional Wall Street backgrounds. By the time the experiment ended, Dennis had made a hundred million dollars from his ‘Turtles’ and created one killer Wall Street legend.

How to Build Wealth
By Bill Poulos

Earn double-digit returns in only 10 minutes or less per day!

After four decades trading the markets and helping over 50,000 students from all around the world become better traders, this book has identified some core principles and very simple steps you can take to dramatically put the odds of success in your favor when trading the markets.

If you’re brand new to trading, this book will give you a huge head start and will help you avoid the common mistakes most beginners make. And if you’re already an experienced trader, it will help you unlearn some of the bad trading habits you may have picked up along the way.

(This book is privately published and cannot be purchased. As I special “Thank You” for checking out this list, you can get it for free after you complete this
15-second quiz, which can pinpoint and eliminate your #1 Profit Killer.)