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On Your Own: Successful Strategies for DIY Investors

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You want more gains in your portfolio, and there’s one way forward: DIY. When you’re fed up with your financial advisor, going it alone can seem appealing, but there are some things you need to know before jumping in with both feet. First of all, investing on your own isn’t easy. This is probably going to be the hardest thing you’ve ever done in your entire life.

Financial planning is an entire profession – doing it as a hobby is like doing construction work as a hobby. You’re never going to be as good as the pros, but you can be good enough to eek out something resembling a return. Here’s how.

Look For A Cost-Effective Platform

A cost-effective platform is definitely something you want to look for if you’re trading stocks or forex. For intents and purposes, financial instruments are all the same. It doesn’t really matter whether you buy into Microsoft stock, for example, from one broker or another.

What matters is how much you pay in broker’s fees and the speed of execution.

If you’re on forex trading platforms, it’s hard to go wrong with a company like Alpari. If you’re trading stocks, companies like Trade King offer reasonable pricing and good service.

Look for Good Service

Aside from the pricing, you want to focus on service. You see, while pricing is important, it’s not nearly as important as the service you get. Sometimes, you luck out, and the cheap option is also the one that has excellent service. How can this be? Some service providers make up for cheap pricing through volume.

In other words, they experience high transaction volume from clients. When you’re making money on 1,000 trades a day, you don’t need to charge very much and you can still provide excellent service.

On the other hand, some low volume brokers out there are trying to compete with their bigger counterparts and they’re flopping in the customer service department. You can usually find out which companies offer a good deal by hanging out on forums and reading through threads started by a company’s client.

You’ll get excellent reviews in investor forums that beat the pants off any paid review website or testimonial.

Know When To Ask For Help

Just because you’re a DIY investor doesn’t mean you have to go it alone all the time. There will be times when you will want help. For example, if you’ve never traded stock options before, you’ll want to learn about strike price, what it means to be “in the money,” and the difference between selling an option and writing one.

Most brokers have online courses that will teach you the basics, and even some investment strategies, but for some applications, it’s best to speak to a broker. Straddling strategies, execution of orders, and technical details of stop losses and trailing stops would best be handled by a live customer support person.

Because some trading decisions can cost you thousands of dollars, it pays to be wise – and wise is usually not “let’s figure out how to do this on my own.”

Don’t Forget About Simple Investments

People almost always forget about simple investments and financial products because they seem, well, simple. But, simplicity is where it starts in finance. You should lay the groundwork first before you get too complicated with the above strategies.

So, why is this advice being given last? Hopefully so that you remember it. Start saving money in either a high-cash value life insurance policy (or a blended whole life insurance policy with paid up additions), an annuity with liberal withdrawal provisions, a money market account, or bank CDs with short durations. You want liquid funds, and these are the products that give you access to your money at a moment’s notice and at a low cost of entry.

Once you have a financial base, you can start investing.

Most traders and investors start with 10 percent or less of their savings as trading capital. That might not seem like much, but remember that these traders are using leverage. So, for instance, they may be borrowing £100 for every £1 they invest of their own money.

That leverage magnifies gains 100 fold. But it also magnifies losses. This is why many investors don’t trade with more than 10 per cent of their total savings. They don’t want to lose their shirts. You would be wise to follow in their footsteps.

At the end of the day, you’re not going to be trading like a pro, but you will be more knowledgeable about investing than most people. And, that’s really what it’s all about.


Joseph Moore has been involved in trading and stocks since he was a young man. An avid finance writer, he enjoys helping new investors by posting his insights online. Look for his informative articles on many finance, money and investing websites and blogs.