In a good part of the operations, waiting to enter the financial markets can mean more than important capital gains. With oscillations that can vary between 5% and 10%, depending on the type of movements you execute in the equity markets. For this reason it is very important to have cool blood when facing the bag. It is a factor that can separate that you have earnings or on the contrary losses. To the point that it can define the behavior of your investments in any kind of scenario and maybe trends. This aspect, which is so important to your interests as a small and medium investor, should not be underestimated.
Well, it is very important that you select the most correct strategy so that you can combine the safety and risk involved in operations in equity markets. Where on more than one occasion you will be able to ask yourself whether it is better to take positions very quickly or on the contrary, it will be worth waiting for you to make the decision. This is a very frequent action when a security has risen in its price valuation. With a real problem of conscience when making a decision. With all certainty that it will have happened to you on more than one occasion.
One of the most effective strategies in these cases is to set goals before entering the financial markets. You must ask yourself what you expect from this particular investment. Because they can unrealistic goals, with few guarantees of compliance. Or on the contrary, achieve more realistic goals although with less demanding returns. It is one of the issues that should be well clarified in these special moments such as those that are generated by the idea of what you have to do. What is better for you, wait or jump quickly to the financial markets? It is something that must be very clear to define any kind of investment management strategy.
What do you get when you wait in the bag?
If you choose this completely valid strategy, you should know that they will generate more than more benefits with the application of this unique strategy. Among some of the most relevant are the following that we expose you below.
- You can be a lot more selective in your performances from now on. Not in vain, you will value the quality of the operations in the stock market more than their quantity. They are a greater guarantee in the same ones that will help to make the savings profitable in a more satisfactory way than until now.
- The margin you will have for mistakes it will be reduced in a meaningful way. As a consequence of much more mature decisions from a technical point of view. Even with the option to improve the results of operations from the moment of conception.
- You will focus in more detail in each of the operations. Both from the precise moment of the selection of the stock market values and in their subsequent monitoring. To the point that you will have much clearer than ever the levels where you must close the operation. With prices always more adjusted to your personal interests to finalize the movements made.
- This unique investment strategy will be a very effective instrument to find the authentic business opportunities that are generated from the equity markets. You can enter at the right time and at the most appropriate price. No risk of diverting attention through other types of operations in these markets.
- Needless to say, waiting in the bag helps you always reinforce your decision. Not surprisingly, you cannot forget that it can have a psychological or emotional effect on your actions in the financial markets. To reaffirm your ideas regarding the relationships that you must maintain with the always complicated world of money.
- If you also use an order of loss limitation, the best known as stop loss, will provide you with a security that you will not be able to achieve through other types of stock market strategies. At worst, they will never hurt, not even in the worst-case scenarios for equity markets.
How to formalize the movements?
Of course, above all you will need a knowledge of these operations. So that their main objective is to monitor the financial markets. Basically based on looking at the maximums of the price every day or week. So that the moment prices decrease leave the positions immediately and collect the benefits that had until that precise moment. It is a fairly reliable method that many market analysts recommend, although it has the disadvantage that you have to be very aware of the evolution of the prices that are marked in the international trading markets.
The effort you have to put in may be much more demanding than through other investment methods. Because what it is about at the end of the day is that get to know the financial markets better. Or at least to better fulfill any kind of purchases in these financial assets. In addition, one of the advantages that waiting on the stock market generates is that you will have much more liquidity in some periods of the year. As a consequence of this action, you will be in a better disposition to take advantage of the business opportunities that come your way at the most unexpected moment. It may be that from time to time you have not been able to open positions because you did not have enough resources to finance the operation on the stock market.
Advantages of using this strategy
There is no doubt that maintaining liquidity in your savings account will bring you more than one benefit from now on. An action that can be very advantageous for your interests as a small and medium investor is based on enhancing the tools of the technical analysis. Because in effect, analyzing the weekly highs and lows will allow you to find the correct signal on the trend of the values. So that in this way, when the weekly highs grow, it can be the definitive signal to start the buying positions. Beyond the potential for revaluation that the shares of listed companies may present.
On the other hand, it will also give you a greater margin so that you are in a position to set yourself logical and coherent objectives when taking positions. Regardless of the deadlines you want to target. While you can go accumulating positions as the uptrend reaffirms itself over the days. Without any pressure on your part since you will only go into the bag a few times a year. Only in those operations that give you greater security in terms of the final result of the same. Something that on the contrary will be much more complicated if you operate in equities with a certain regularity.
Cut in investment expenses
The decrease in operations in the equity markets leads to an increase in savings in commissions that you will have to face from now on. In this sense, you cannot forget that the higher the amounts invested - despite the increase in commissions - the lower the impact will be on your checking account balance. It contrasts with the higher expense involved in carrying out many small operations. Also with regard to other disbursements in the management of securities, such as the custody and maintenance fee. Although it is true that they are the least demanding of all.
You should know that if you add all these commissions they can represent up to 1% of the invested capital. Subtracting competitiveness from the possible profits that you can obtain in any of the operations on the stock market. Beyond the tax effects that you will have to assume in your next income statement. Both with regard to the capital gains generated and the dividends you collect as part of the remuneration offered to the shareholder. Of course, it will always be much more profitable for you to carry out few operations than many, even if they are small. To the point that you will be more sensitive so that you can save more money through equities.
Another aspect that you should take into account is related to the income statement. In the sense that if you opt for fewer stock operations you will always have greater benefits. Although very careful with this aspect, because with the same argument the levels of losses can be more bulky. To the point that you can leave a lot of money in the financial markets.
To avoid this scenario, you will have no other solution than to be more vigilant in the movements of your actions. Where at the slightest sign of weakness you will have to undo, totally or partially, your charges in equities. Either through a more or less traditional monitoring or with the application of the stop loss orders. It will help you achieve your goals more easily than before. It is a very relevant factor that generates this kind of very special operations due to its own characteristics.