Investors Suck At Investing

Typical investors lose money trading. Here is a partial list of the issues they possess and how to fix them.
1) They have trouble taking profits.
2) They have trouble taking losses.
3) They hold back too long to confirm that the trend is in place, only to get in just in time for a fallback.
4) They lose two times in a row, and refuse to take the next trade - because of that, they ignore the big move.
5) They trade stocks and don't recognize factors that can influence the stock's price.
6) They presume that "buy and hold" works.
7) They go long a down market.
8) They go short a an up market.
9) They invest too much of their equity in a single stock or trade.
10) Investors, as a whole, are much too controlled by emotion.

This article gives you a financial market timing system for the S&P 500. The S&P 500 represents 500 stocks, as you probably appreciate. Since the S&P 500 is an index and isn't traded, you will need to trade the exchange traded fund called SPX. The SPX which is a proxy for the S&P 500 moves smoothly, and generally unexcitedly. Unless you are really exact with your trade entries and exits, you probably won't profit trading SPX in the short or intermediate term. You need a set of tools, or at least a number of principles. Continue reading, and you will have these principles.

Because the SPX represents 500 stocks, you won't see the exaggerated moves you might expect if you own an individual stock. If you have traded stocks, you appreciate that they can be volatile. If the CEO gets perp walked away in handcuffs, if the company under-performs, or their drug doesn't get authorized, expect great movements in that stock price If you hold an individual stock through its earnings announcement, you very likely will be astonished by the extent and intensity of the move - frequently against you, it seems.. You won't have to be concerned about earnings announcements, if you trade SPX. There are so many stocks represented by the SPX, the earnings announcements effects are reduced or eliminated.

Tools to use to trade SPX:

Leveraged ETFs

Many traders don't think you can make money trading SPX in the short term or intermediate term. You must have a long-term horizon, or use leverage. Leverage can be provided by trading options on SPX, or, a much easier procedure is to trade leveraged ETFs like SSO and SDS.

SSO is the 2X bullish leveraged ETF and SDS is the 2X bearish ETF. With a leveraged ETF like SSO, a 5% move in SPX gives you approximately a 10% move in SSO. You can trade the bearish ETF, SDS, if you want to gain from a sliding market - even in your IRA account.

Money management

You will need to use money management if you want to gain from trading SPX. In fact, you will need money management if you desire to trade any stock, option or ETF. Here is a tested, manageable money management secret that works very well. It is based on the movement of SPX.

The money management or if you prefer, risk management approach, is rather simple: When SPX has moved in your direction by 5%, you sell 25% of the shares you hold. If you get another 5% move in your direction, sell one-half your remaining shares. Sometimes SPX will move 15%, in your direction. This is rare, but it has been happening. This has been occuring more frequently since the Federal Reserve has been employing quantitative easing, QE1 and QE2. Many gurus believe quantitative easing has accounted for the recent, continual rise in the stock market.

You must fight your greed! If you don't take profits when become available, they will very likely vanish from you. If you have been trading for a while, I am sure you will agree with me that It is wearisome to take profits - we are all so greedy. I would guess that you have lost money on a great trade that unexpectedly turned around on you.

Use a Market timer

How do you know what the market is going to do? A market timing service is your best tool. Humans are incredibly poor at estimating which way the market is likely to go. Even people experienced traders, find that following a market timer procedure makes a big difference in the results.

Leap of faith

Employing any market timing service is hard to comprehend. Investors can look at the actual performance results of a timer and still think that they can do better. If you have trouble following a market timing service, then make your trades smaller. Ultimately, you will gain the confidence you need to trade larger amounts of your equity. By the way, I have met very few people who can persistently out-perform a good market timing service. Investors are much too emotional.

To summarize:

Don't trade individual stocks. Trade a leveraged ETF representing a broad-based index, to bring about diversification. Use a money management approach. Subscribe to a market timer service. Get control of your feelings so that you can follow the timer. Utilizing these tips will improve in your success at the trading game.


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Follow a basic trading system supplied here and improve your investing profits. If you would like to read more blog posts about how to enhance your trading, visit SPXTimer.com