Investing and trading can be extremely challenging as there are no short cuts or investment Holy Grails. However, applying the right technical tools along with sound fundamentals, coupled with risk management the outcome can be very rewarding. IVIEWMarkets has defined our principals that will help make the investment process much more successful.
- Technical Analysis is ONLY a Tool:
There is no Holy Grails or secret indicator when it comes to technical analysis. Technical Analysis is not predictive of future price moves and is reactionary as technical analysis can only look at all known information that is currently in the market place. This doesn't mean technical analysis is not useful. It should be used in conjunction to fundamentally strong companies as a resource for entry and exit points and risk management.
- Returns are driven by the management of risk not the management of returns:
Volatility alone is not risk or bad. As investors we want to avoid large drawdown's and in order to do this there are many things investors must focus on like; reduced downside deviation or downside volatility by using moving average to reduce weaker price trends. Avoid concentration risk and avoiding position sizes greater than 5%. Lastly, pay attention to the correlation of your portfolio holdings, via diversification.
- Invest in the best:
Investing is hard enough; why not stay with the most liquid and well covered stocks. The S&P 500 universe is comprised of maybe some of the best companies in the world in terms of growth, balance sheet and the income statement. This doesn't mean you won't see companies in the index become terminal in their businesses. However, many of these names are very liquid and are covered by many of the best sell side analysts that makes these companies trade more efficiently.
- Always be skeptical, but not emotional:
Technically speaking, investing should not be fun and exciting. Yes, it's great to see your balance increase and get an investment correct. However, if you are becoming excited you are too emotional and this will lead to bad decisions. Always, stay skeptical and make sure we have a real catalyst for your buying and selling.
- Never overlook the fundamentals: