Happy Fourth of July! Since the markets are closed today, I thought I’d take this time to offer up some advice on how to become financially independent.
You see, I have a lot of empathy for investors these days. All are getting bounced around as the market wears on the convictions of both the bulls and the bears — despite the bullish market I see developing.
Stock valuations are still high. Volatility has been all over in previous months. And the geopolitical climate is fragile and unsettled. In a way, it feels like we’re in one of those “damned if you do, damned if you don’t” situations. That is, unless you have just the right system in place…
The question all investors are struggling with is: “How do we make money today while also guarding against an ever-uncertain tomorrow?”
My answer to that isn’t sexy. But it is actionable.
Successful investing requires a healthy balance of patience and action . Wall Street’s “-isms” can lead you down a bad road if you take the advice to extremes.
For instance, consider these competing nuggets of wisdom:
- “Cash is a position,” and
- “You’ve got to be in it to win it.”
The former implies that being out of the market (i.e. “in cash”) is okay. The latter implies that if you aren’t fully invested, you aren’t really an investor.
So, which is it?
The Simple Key To Cutting Losses and Winning Big
I’ve learned over the years that a middle-ground option is usually more favorable to the extremes. Successful investing is all about balance.
That means staying fully invested most of the time. By adhering to trend-following risk management rules, keeping a diversified portfolio, and limiting the time exposed to any one trade.
It also means no forced new trades just for the sake of trading. Sometimes the best trade is no trade. And I give a more under-the-hood look behind how to become a successful systematic investor in my 7-Figure Trader service.
Being financially independent requires a healthy balance of patience and action. Waiting patiently for the right opportunity to get into the right investment is almost always rewarded.
But the balance between patience and action doesn’t just apply to the buy side of the equation.
Every good trade is made of a good buy and a good sell.
John, Charles, and myself have designed systems to give specific, crystal clear buy signals and a well-defined exit plans, allowing us to balance patience and action. You can learn more about these systems by clicking here.
Let’s consider another of Wall Street’s both-sides-of-the-street advice…
You might have heard the phrase, “You can’t go broke taking profits.” And how about, “Let your profits run”?
Again, which is it?
Timing Is Everything
I’m sure you can remember a stock you sold for a nice profit… only to see the rally continue on without you. Just as sure as I bet you can remember a stock you sold for a nice profit… very close to its peak.
The point is, the decision to take profits can cut both ways. Sometimes you’re glad you did. Other times you’ll regret it.
Again, I’ve found the best success in a common sense, middle-ground approach.
My research shows there’s a high-probability, high profit-potential “sweet spot” following my Cycle 9 Alert algorithm’s buy signals, something I explain further in 7-Figure Trader . It lasts for two to three months. After that window of time, the chance of continued success drops to 50/50 — odds I’m happy to leave to other investors.
The relatively short holding period allows to routinely capture the “meat” of strongly profitable moves without overstaying our welcome, so to speak. Essentially, it’s a healthy balance between “you can’t go broke taking profits” and “let your profits run.”
And this approach is my action-oriented answer to the question we began with: “How do we make money, today, while also guarding against an ever-uncertain tomorrow?”
Taking profits, or cutting losses when occasionally necessary, after two to three months meets the requirement to manage risk and adapt to changing market conditions. It’s a balance of patience and action that lead to some nice profits on both sides of the market and finally being financially independent.