How To Manage Your Portfolio

[StockAtlas]

First and Foremost I would like to thank the administrator's and everyone who helped make this forum such a great place for beginner's and seasoned trader's alike, Thanks! It's people like me who greatly appreciate's what I learned from this site and it's because of this site I've learned a valuable lesson I believe I will take with me forever until my days end. And That is by helping others because of the ones who paved the way by helping me. This probably is the only website I have ever been to where I gained a fortune! But not with cash or currency, but In Value. Until I came across this forum, I was always real shrewd,shallow and cold hearted to my fellow man because Thats just what life had given me. So in essence, I was just giving it right back! But It is, here where I learned How to "Fish" instead of having someone else fish for me. And With My Deepest Appreciation I will "continue" with the tradition of helping others as others here and in life has helped me.

 

With that being Said I hope this thread will be a Rosetta stone for new beginner's to help manage and organize their portfolio as well as a how to guide for money management. Consider this a portfolio management tool because I am welcoming everyone "Including Myself" to leave their comments about their own portfolio management tools,techniques,plans etc..

 

here's an example of what I use;

 

1) Regardless of account size, divide the balance into five (5) equal parts.

Consider these 'sub-accounts' within one larger account and treat them

as such.

2) STICK TO A TRADING PLAN REMEMBERING NOT TO INVEST NO MORE THAN U COULD AFFORD TO LOOSE AND WHAT U CAN AND CANNOT AFFORD TO INVEST.

This will prevent you from 'loading the boat' in one market move that may

not be as profitable as others and to help you from going broke on one trade.

3) When a trade is closed, ADD THE PROFIT TO THE INITIAL AMOUNT AND

REINVEST

THE ENTIRE NEW BALANCE IN THE NEXT ENTRY (this way you are

compounding

profits trade to trade).

4) Continue until 'sub-accounts' have reached short or long term goals. At this point, add

sub-accounts.

 

Initially, Having a Trading plan that has risk management,trade management and having a proven strong profitable plan will always help build your portfolio!

Edited May 28, 2011 by StockAtlas

[StockAtlas]

Also here's another important tip I highly recommend.

 

Avoid the "Get Rich Quick" mentality.

 

Forex newbies are often misled by the idea that forex trading is an easy way to make a lot of money in a short amount of time. Often, they do not recognize the potential for loss, nor do they understand everything that's involved in becoming a successful trader. Trading larger volumes means taking more risk, and for that reason may prove unsuccessful in terms of gaining more profit and should be approached with a strong understanding and skill set.

 

Develop a strategy before trading.

 

When entering any market, traders often develop strategies to guide them in opening and closing positions. Establishing a concrete and developed strategy before trading allows traders to maintain focus. Determining a strategy ahead of time helps traders to concentrate on their trading method and eliminate doubt.

 

Do not trade based on emotion.

 

It is important to remain rational when trading. Letting emotions take control can result in careless decisions. In our opinion, you should remember what you have learned, stick to your strategy and evaluate each situation with a confident state of mind.

 

Never invest money into a real forex account until you practice in a demo account.

 

Disciplined traders who stick with a tested trading plan typically perform better over the long run than those who trade inconsistently. Having a trading plan, but not sticking to it, or constantly changing the plan to fit new trades, defeats the purpose of a trading strategy. It's also important to maintain consistency with your trading system and follow it up with good analysis of your own processes in order to improve your trading strategy going forward.

 

Choose the time frame that is right for you.

 

Choose a time frame which you are comfortable with, and one that gives you enough time to analyze the market and open/close orders. Some people cannot wait for hours for the price to make a move; they like action and therefore prefer smaller time frames. On the contrary, for others 15-30 minutes can prove to be difficult. Try out different time intervals on a Demo account and choose one that suits your strategy and temperament.

 

Always take a look at the time interval bigger than the one you've chosen to trade in.

 

The larger time interval reveals the bigger picture of market movement and helps to clearly define the trend. Even if you typically trade using a short term chart, it's always helpful to look at longer term time intervals to determine the proper trading context.

 

Pay attention to trade size!

 

One important difference between successful and unsuccessful traders is that successful traders survive under unfavorable market conditions, while unsuccessful traders do not. Traders should stick with their trading strategy, even if they have a few large winning or losing trades. Maintaining a consistent trading strategy and using proper risk management are two of the most important keys to successful trading.

 

Building a Solid Trading Plan through back testing on Demo, is the first step towards building a stronger portfolio.

Which also helps eliminate the speculator's worst enemies; Ignorance,greed,hope and Fear!

Learning to get past these curves helps you over time avoid strike outs and eventually hit a home run!

Edited May 28, 2011 by StockAtlas