Thursday, September 01, 2005

How To Build A Successful Portfolio

How many of the STS stocks you will trade at a time is going to be limited by your available capital, but do not under any circumstances put all available cash into one stock position. My personal recommendation is a minimum of two. The maximum is up to you, but diversification (owning 10+ stocks) is another word for ignorance. Well, you are not ignorant anymore. You now have a system, which able to identifly the VERY BEST STOCKS. You have to put more into each position to take maximum advantage of them in order to make the big gains. The absolute MAXIMUM number of stocks I will hold at any one time is 4.

This also doesn't mean that you should invest in all four of the first stock selection you come across. You can and should add to your portfolio slowly, one by one. Once you've reached a maximum holding, only add new stocks when one you are holding either gets stopped out or indicates that it's time to take profits.

Most people gloss over position sizing/portfolio management or totally ignore it. This suff is boring. It doesn't sell for $3,000 seminars. So you will not see this area heavily marketed. Most people never seem to get it.

REALIZE THIS: It's not the system that makes money. It is correct position sizing and having the discipline to follow the system rules (Psychology of Trading).

Anyone who does this is a successful trader.

1 Comments:

Blogger Millionaire Dreamer said...

Mr CL,

This blog is the best I am able to find, better than any chat room. As a trader myself, your blog serves as a constant reminder to me not to forget the rules of trading.

8:52 AM  

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