I know I’m always banging on about how most people lose money in the stockmarket because they don’t have a decent investment strategy. So sorry not sorry, I’m going to go on about it again…
We’ve covered lack of strategy quite a few times in some of our guides and articles like:
- The key to long term success – know yourself
- How to invest in Gold
- Five ground rules for investing
- How to trading and invest in ETFs
- Tips on forex trading strategies
But, we always try and limit our guides and ramblings to between 300 and 1,000 words. For two reasons really. First, we assume that people will get bored of reading them if they are too long. And secondly, rather evilly and commercially, Google tends to rank articles of that length with higher priority so they have a greater chance of being higher up the search results when people are looking for them.
However, if you have more time want to know more about how and why this happens and what you can do about it read The Art of Execution by Lee Freeman-Shor. It’s around 200 pages and it about a 2-3 hour read. This is a book I wish was written 20 years ago when I first started spread betting with IG and was guilty of pretty much every mistake highlighted in the book. It would have saved me a few quid over the years…
Most investors who lose money have terrible execution and post-investment strategies. The main issues being they take profits too early and run losses too long. We cover this a little bit in can you give up your day job to trade forex...
Over my 20 years as a broker and dealing with every single type of clients from the smallest spread bettor to the biggest fundies, that has always been the common theme among traders and investors that lose money.
You can see the stats for what percentage of people lose money when trading derivatives products here. CFD trading is clearly different from long term investing, but the principle remains the same.
The Art of Execution by Lee Freeman-Shor is a fantastic read and succinctly captures the flaws in most people’s investment strategies. And most amazingly, does it using hundreds of millions of dollars and some of the world best investors as guinea pigs.
Obviously, the book can’t tell you what stocks to buy – that’s up to you. But that’s the easy bit, the hardest bit is knowing what to do after you’ve bought them…
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Richard founded the Good Money Guide (previously Good Broker Guide) in 2015 and has been a broker for 20 years most recently at Investors Intelligence and previously a multi-asset derivatives broker at MF Global (Man Financial). Richard started his career working as a private client stockbroker at Walker Crips and Phillip Securities (now King and Shaxson) after interning on the NYMEX oil trading floor in New York and London IPE in 2001 & 2000.