Warren Buffett and George Soros are buzz words of newcomer traders and investors. These billionaires have made a fortune on various methods and strategies. Buffett has used the fundamental analysis and the related value strategy; he was looking for undervalued stocks and investing in them for a long term. Soros, in his turn, became famous for his speculative strategies – by using insider information and provoking other players with a series of analytical articles, he performed dozens of successful transactions.
The strategies of well-known traders have gained them billions of dollars, but this does not mean that they can be used by a newcomer. You may not have such a deep understanding of economics as Buffett, and lack such connections that Soros possessed.
Preferable strategies for new traders
Let us begin with the basic principles that you should accept, regardless of whether you want to trade stocks on regular basis or make long-term investments:
1. Do not borrow from a broker. Neither stock, no money to purchase them. It's one thing to risk your own, getting into debt is another.
2. Do not invest a large amount in one asset, even if, in your opinion, it promises 100% profit. Risks are always there.
3. Accept the possibility of defeat as given. Not all your transactions will be profitable. It is important to have more profitable once though.
Focusing on these principles, build up your own strategy. It will help you to take a hold on yourself and not to incur debts when you feel inclined to make an ‘on-the-spot’ deal.
Popular strategies for traders
It is simple: you select stocks that promise the best dividends. Even if some of the shares do not bring profit in the upcoming year, you will benefit still and keep your assets. The rate of securities will have nothing to do with you.
‘2 to 1’ Strategy
The strategy is suitable not only for a long-term investor, but also for an experienced trader. You select an asset, purchase it, and as soon as its value increases, you sell half of it. Later, at the next increase, you can sell part of the shares again. This strategy is for cautious traders: it allows you to stay on a safe side in any situation and minimize the risk.
What makes trader’s success – is it strategy, experience or nothing but luck?
All the billionaires were once newcomers. All successful traders, whose strategies are discussed each and every year, have experienced losses more than once or twice. The role of experience and luck cannot be overemphasized, but what really makes trader’s success is patience and rigid adherence to the selected strategy. And also in the ability to recognize the right moment when the strategy can and should be abandoned.