Investors create their biggest problems when they change their investment strategy without sufficient reason. The trouble begins when traders jump from one trading strategy to another to follow the short-term sentiment, mainly because a product seems to have changed.
Each investment strategy has its advantages and disadvantages. Someone who has expertise in picking stocks should continue to use this approach, despite the risk of big drawdowns. A perfect trading concept does not exist, unless someone has discovered a niche product and keeps quiet. At the same moment that this niche market becomes common knowledge, the profit potential disappears.
Each investment strategy has a predetermined pain level that investors can identify. It is important to know this pain level before executing an investment strategy.
Was this article helpful?