Successful investing is not an easy business… Even for the best in the business, Warren Buffett, George Soros, Bill Ackman and countless others all take losses from time to time.

However, you don’t have to win every trade to be a successful investor. To see real results, you just have to win more than you lose, preferably substantially more.

Unfortunately, most new investors start off trading the exact opposite way that they should trade. Buying assets after they’ve already appreciated, not understanding valuations, not looking at technical analysis patterns, selling when the market takes a dip, or my favorite, trying to get rich quick. For this reason, I would like to cover some basic fundamentals when it comes to investing.

The smart investing community already uses the following set of investing ideas, which is why new traders should also implement the following procedures when it comes to investing.

Don’t Invest in Something That Does Not Make Sense to You

Every investor should have a clear picture of why their investment is going to appreciate in value. If you don’t understand why you’re doing what you’re doing, you’re probably not making a wise decision with your money.

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For example, if you join an advisory service that doesn’t explain the fundamentals behind the investment and simply just posts what the trade is, you really have no idea why you’re doing it. Who knows if they actually put in the time to understand trade or if they’re just selling you a bunch of hot air…

Every investor should understand the risks and why the trade will go the way they expected. Otherwise, they should look for something else.

Don’t Expect to Get Rich Quick

It’s always nice to jump into a trade and have it appreciate substantially in value, but those situations are few and far between. If it were that easy, the world’s top investors would always use this approach. The fact is, if you’re looking to make substantial returns over a short period, you’re taking on a substantial amount of risk, and managing risk is one of the critical elements to profiting.

Remember, the same accelerated method you make money is the same accelerated method you lose money. And chances are, if you decide that you’re going after super accelerated gains, you’re likely in the class that will lose money.

Don’t Put too Much Money in any One Trade

When something sounds really good, it can be tempting to oversize your trade. But the world works in funny ways. When you decide to do that will be the one trade you lose. It’s essential that you don’t lose a lot of money because your money is the fuel to make even more money. So, it’s important to make sure you don’t risk your future ability to make profits from a single bad investment.

Learn from Your Mistakes

Every investor makes mistakes, but it’s essential not to make the same mistake over and over again. It never surprises me that investors don’t learn from history and continue to fall into the same trap again and again.

Even Warren Buffett claimed he would never invest in airline stocks again… Unfortunately, he broke his own rule and lost big the next time around.

There are many mistakes investors can make, and chances are you will all make a lot of them, but it’s important to learn from your mistakes to be better equipped to handle the situation the next time you see it.

If You’re Unsure… Don’t Do It

I’ve learned over the years that there’s a nearly unlimited amount of investments out there. You may be unsure about and investment but decide to jump into it anyway because you have a fear of missing out (FOMO).

FOMO is certainly not a reason for an investment, but just because you missed one trade, even if it was profitable, doesn’t mean you can’t deploy your money into another trade that is also profitable.

If you’re unsure about the investment, it’s wise just to skip it and wait for the next one. Trades that makes sense are going to outperform trades with uncertainty over the long run.

Wrap Up

Every investor should follow these rules, whether they are a beginner or an industry professional, these are smart philosophies to consider before opening any trade.

It is vital to make sure you understand what you’re doing and why you’re doing it so you can make the best decisions possible for your money and your retirement.

At OptionStrategiesInsider.com, we follow all of these rules while taking the time and effort to ensure we are opening a position with a high probability of success. This option strategy is why we win nearly 90% of our trades. This is easy for our members to see right from the start as we provide complete detailed research reports, so everyone can understand what we’re doing and why we’re doing. For more information about our memberships and to pick up your free options trading course, click here.


Chris Douthit
Chris Douthit

Chris Douthit, MBA, CSPO, is a former professional trader for Goldman Sachs and the founder of OptionStrategiesInsider.com. His work, market predictions, and options strategies approach has been featured on NASDAQ, Seeking Alpha, Marketplace, and Hackernoon.