Rate of Return Improving Strategies

Investors can improve returns.

Traders evolve. They start as discretionary traders, trading on gut feel, news, and hot tips. They become technical traders, trading on charts and analysis. They become system traders, bounding their technical trading with money management rules. Some successful traders get there with talent and good luck. Most successful traders got and stay there with strategy and discipline.

Investors may not be traders but they trade.

Investors can evolve. They start with discretionary trades, trading on gut feel, news, and hot tips. They learn what fundamental analysis is, and sometimes how to do it. They learn how to screen stocks based on fundamental data, using financial publications or internet sites. They learn what technical analysis is, and sometimes how to do it. They learn how to screen stocks based on technical data, using publications, internet sites, or computer programs. They become portfolio managers, bounding their trades with money management rules. Evolved investors, portfolio managers, have a strategy and they work it.

Shortcut

A shortcut to evolving is to find/buy a strategy that works and use it. This can save time and money. No matter the strategy's source, it must inspire disciplined adherence.

Money management rules:

• Limit how much equity will be in each position.
• Set equity/cash ratio targets
• Require disciplined adherence to strategy
• Promote diversification
• Require that pyramids be built from the bottom

Above are sample rules. Actual rules would be more specific, and maybe more numerous.

Strategies can have as a goal of either meeting or beating the market.

Discipline

A good strategy is nothing without discipline. Investors need to muster the discipline to stick with their strategy. It helps to have faith in your strategy. Faith can be built with back testing and paper trading. Backtesting models can be built in PC worksheets or specialized programs. Papertrading can be done in PC worksheets and at some websites. Papertrade with our free Excel Portfolio Tracker. Paper trade at Marketocracy.com it is a good site for wannabe portfolio managers