Can you explain your trading strategy in 3 sentences or less?
Go ahead and give it a try in the comments below.
This is an important exercise for any trader of investor as it demonstrates mastery of an existing strategy. Meaning, if a trader knows their strategy inside and out, and has practiced it or modified it over a period of time, they also can explain it quickly and succinctly.
• Are you a swing trader? What criteria determines a trade? • Are you a value investor? What metrics do you use? • Are you an algorithmic trader? What code powers your trading?
All of these questions and more go into explaining your trading strategy, which is ultimately the process you're using to trade markets. However, it's often observed that new traders don't have a strategy. Instead, their trades are impulsive and random. As a community, we can use the comments section below to showcase our individual levels of expertise, helping new traders along the way and watching pro traders innovate.
We look forward to seeing what everyone writes in the comments below.
In addition, the more people who share, the more we can learn.
Be sure to like, follow, and comment on the traders who have the most interesting answers. You may find a great follow and improve your social feed here.
1-Invest in companies with a margin of safety. This means buying stocks that are trading below their intrinsic value, which is the value of the company's future cash flows. A margin of safety helps to protect your downside risk in case the stock price falls further.
2-Invest for the long term. Value investing is not a get-rich-quick scheme. It takes time for the market to recognize the value of a company's stock. Be prepared to hold your investments for several years or even decades.
3-Use a variety of metrics to identify undervalued stocks, including P/E, P/B, dividend yield, FCF yield, and ROIC.
1. Look at patterns and price action
2. Identify areas where you can properly manage risk
3. Keep the long term vision