Don’t Let Taxes Drive Your Decisions

A successful self trader – Rule # 45

It is a common belief that your investments should be tax-efficient. Remember, taxes should never ever drive your investment strategy. Investing should always be a risk-return trade-off. If you get tax benefits in the form of exemptions or lower tax rates, it is just the icing on the cake. The danger here is that a tax-based strategy can lead to wrong allocation and bad investment decisions. Continue reading

Trade Like A Hard -Boiled Mercenary

A successful self trader – Rule # 32

Well you need to take this rule with a pinch of salt. Mercenary is a person who changes sides based on whatever is best for the situation. That is the job of a trader too. In the stock market you face many choices. To trade or invest is one choice. To go long or to go short is another choice. To hedge or not to hedge is another. The answers to these are simple if you start thinking like a hard-boiled mercenary. Continue reading

The Stock Market is Always Right

A successful self trader – Rule # 29

All your trading strategies should be based on this premise! It does not matter if the price on the screen is logical or illogical. It also does not matter if your reasoning sounds more logical than the market. For a trader, there is no greater truth than the tape. As long as you build your strategy around this premise, you are more likely to end up on the winning side. Else, you end up on the losing side. Continue reading

Keep a crash shopping list ready

A successful self trader – Rule # 28

Back in 2002, i asked a savvy investor the secret of his success. His answer was enlightening. Keep a crash shopping list ready and be liquid enough to capitalize on the crash. In retrospect, this is so true. We typically find investors who are fully invested at the top and hence are not able to make the best of a crash in the market. That is where you lose out. Keep a shopping list ready and be liquid in a crash. Continue reading

Adapt your strategy to the market

A successful self trader – Rule # 24

We have learnt in the theory of evolution that it is not the strongest species that survives. It is the species that adapts best to changes. The same applies to trading and investing. A rigid approach can finish you. If you adapt your strategy to changing market dynamics, you are most likely cut out for the long haul. The choice is yours; whether you want to be the giraffe or the dinosaurs! Adapt or get trampled.

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