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Jeff Diercks
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Jeff Diercks, is an investapreneur and recovering CPA. He actively trades his own money and manages the assets of a select group of clients at InTrust Advisors, a Tampa, Florida based wealth management firm focused on trend following and price momentum strategies utilizing ETF securities. Mr.... More
My company:
InTrust Advisors
My blog:
InTrust Advisors
My book:
www.Stock-Signal.com
  • Be Objective! Subjective Analysis Is For Losers! 0 comments
    Jan 28, 2013 3:45 PM

    So what does it mean to be objective? According to Dictionary.com, it means "not being influenced by personal feelings, interpretations, or prejudice; based on facts; unbiased: an objective opinion." So what does this have to do with investing? Simple! You need a plan!

    Do you have a plan for investing? If not your subjective analysis will over time make you a loser!

    (click to enlarge)

    Let me give you a personal example from my life. When I began short-term trading, I grabbed a Day Trader's book and began to implement their strategies. After all I said to myself, "I have been trading for a long time."

    Mistake!

    The minute these strategies stopped working, I had nothing to hang on to except doubt.

    So what did I do? I began to back-test each strategy to understand when they worked, when they struggled. I ended up massaging each strategy and made them my own, including when to use them or another indicator to confirm them.

    The result! Now my short-term trading is doing better. I am calmer, more objective and not dismayed by occasional losing streaks. I have everything about those trading strategies documented and clear in my head.

    How long ago did this happen? You might be surprised to know....just last week. That is why I cannot give you some kind of 100% gain type number. However, I am already seeing a difference.

    How to Get a Plan?

    So how does one get a plan? Simple! You decide on an investment style that works for you and you document everything about that strategy. Here are few things to consider:

    • When to enter a trade or position.
    • How to establish a trade target.
    • When to exit a trade or position.
    • How to protect capital via risk management such as stop losses.
    • How to advance this protection as the position moves up.
    • Where to position protection and an acceptable loss.
    • The amount of upside vs. downside before you enter a trade.
    • Position sizing and diversification.
    • Markets or positions to trade.

    I am sure there are more, but this is off the top of my head.

    This plan should be written and something you refer to frequently.

    Example Plan

    Here at Stock-Signal.com, we have a plan and it goes something like this:

    • Trade liquid broadly diversified ETFs in a portfolio.
    • In our sample portfolios, hold at least four (4) indexes on which signals are generated.
    • Enter on a trend following buy signal confirmed by multiple signals.
    • Sell and enter an inverse (short) ETF on a sell signal confirmed by multiple signals.
    • Hold that position till the next signal, no stops.
    • Always be fully invested in each position, either long or inverse ETFs.
    • Accept that there will be periods of under performance (see 2011) and periods where we hit home runs (e.g. bear markets).
    • Be patient and following the signals religiously. Back-test to develop religious comfort.
    The Benefit

    A trade plan allows you to be objective. Without a plan you will drift like the seas and your investing will suffer. You will also lack anything to hold onto in those inevitable periods where your investment strategy is not working.

    Plain and simply, an plan brings peace of mind!

    How You Can Benefit From Our Work?

    We do all the work for you. If you are time constrained, rely on our work. As a member, we provide you with several model portfolio (see performance updates).

    We provide the signals and the training on how to implement this simple system. All you need to do is execute them religiously as delivered on Fridays just before the close.

    Why not get a Free Trial today?

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