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Why you shouldn't let volatility stand in your way of making money investing in shares

by , 09 September 2015

Stop losses are a great strategy to use. They prevent you from suffering a catastrophic loss with one or more shares.

The key to using stop losses is to stick to them. Over the long run, you should benefit from cutting the losers out of your portfolio.

But when stock market volatility hits and a number of your shares hit their stop losses, it can be disheartening.

But don't let it…


How to be successful investing in shares


When investing in shares, there is one thing that stands successful investors out from amateur investors.

Amateur investors only concern themselves with the potential rewards of investing in shares.

On the other hand, successful investors know they’re going to make money from investing in shares over the long-term. Their only concern is risk and managing it.


The key to making money investing in shares


A great investment has two key components, Dr Steve Sjuggerud in Daily Wealth explains:

  • A great buy; and
  • A great sell.

This is why it’s so important to buy into shares at a fair price. You need to be patient to ensure you’re not overpaying for a share. This has a big bearing on your long-term profits.

Selling at the right time is also vital and that’s why stop losses are so important. They protect you from the downside. Managing your risk is crucial to making money over the long-term investing in shares.

You have to sell when it’s time to sell. And if that’s due to your share hitting its stop loss, so be it.

When the stock markets are volatile, your main concern should be risk rather than reward. This is why stop losses and other risk management strategies are crucial during times like this.

So there you have it. Why you shouldn’t let volatility stand in your way of making money investing in shares.

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Why you shouldn't let volatility stand in your way of making money investing in shares
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