So far, January has been devastating to a lot of investors. So many think that they can only make money when the market is going up. Unfortunately, a high percentage of retail traders have no exit strategy and are wed to the concept that the only way to successful investing is buy and hold. Every so often, I get emails from subscribers who are adamant that buy and hold is the only way to go. My question to them always is: "Hold until when?"
At times like we have been experiencing since late December, when markets are diving, I can only guess how those investors must feel. Protecting principal is critically important in my view and there are many ways to do that when trading the markets if we only know how.
You may or may not know that you are able to "insure" your stocks and you may or may not be aware that you can create positions that literally have no risk (as long as there is a country and a stock market) but I suspect that the vast majority of investors have no clue how to reduce or remove risk.
New investors arrive every day. Baby-boomers want to retire but fear they don't have enough money or fear they will outlive their money. People are afraid that trading is too risky for them and that feeling can be reinforced by drops in the market as we have recently witnessed. Certainly the major media add fuel to the fire with their long-faced "the sky is falling" approach to reporting the market headlines.
Fear exists because of risk or at least a failure to understand and manage risk.
Not long ago, I was sought out to write a book about investing and trading. When I considered the proposition, I decided that I could be most helpful to baby-boomers, new traders, and even experienced investors if I could provide specific information on how to appreciate risk and then how to use strategies that would substantially reduce or, in certain situations, even remove risk entirely.
"Trade Your Way to Wealth," is the title of my new book that is the product of those efforts. The sub-title: "Earn Big Profits with No-Risk, Low-Risk, and Measured Risk Strategies" describes much of the content. In the book, I set out in detail how to set up your personal trading plan and then show you how to use many strategies that can increase your wealth, reduce your risk, and produce regular income (some of it even tax free). Yes, I even describe exactly how to set up a zero risk trade. You will learn specifically how to profit in up, down, and sideways markets and I include an appendix that compares each of the strategies including relative capital requirements, risk, desired market direction, and capital required. Some trades can even be entered with a credit.
Whether you are a novice trader, a baby-boomer looking toward retirement, or a seasoned investor, if you are serious about your money and serious about your investments, I believe "Trade Your Way to Wealth," will help you advance your skills and help you control risk better than you ever have before.
I know that much of this article has been a commercial for "Trade Your Way to Wealth," and I intended it to be. I am proud of the book and I hope my pride is justified. It is my sincere belief that it will help you advance your trading and investing knowledge in some very positive ways. "Trade Your Way to Wealth," is currently available at Amazon.com, barnesandnoble.com, bordersstores.com and many bookstores nationwide. If you would like me to sign a copy, I'll be speaking at Traders Expo in New York City. The Expo is free and runs from February 16 to 19. Just come to my talk or look me up, I'd really like to meet you.
by Bill Kraft, Editor
Copyright 2008, Makin' Hay, Inc.
All Rights Reserved
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