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It's simple and deadly. And often the simplest things hold us back from achieving far more success across nearly every aspect of life. The good news is that investing is much easier to improve rather quickly than many might assume. Changing a few small habits here and tweaking a couple of tactics there can yield outstanding results. But in order for investors and traders to make the tiny improvements required to help them thrive in the market, they must first identify the issues and what is holding them back. The main threat to most of us is … basic human emotions. They prevent countless investors and traders from performing far better than they should. The cliché goes that emotions often get the better of us. This can have devastating impacts when it comes to making money in the market. Of course, emotions are impossible to remove entirely. Yet if you can step back and avoid fear, overthinking, second-guessing, and constant gut-level reactions, your path to trading and investment success can be surprisingly easy. Especially these days, the best professional investors and large money managers attempt to take nearly all of the second-guessing and emotion out of their strategies. They harness focused, repeatable, and proven trading methods to transform their portfolios today and for years to come. Emotional Trading Leads to Missed Opportunities Volatility and swings force even the most seasoned professionals to make emotionally driven trades and investments. This is made more frustrating because many of those same investors and traders put tons of time and effort into researching that stock, its industry, and beyond. Those who let emotions control their strategies often fall victim to the dreaded 'buy high, sell low' pitfall. Some of those same investors might then avoid buying stocks as they rally back higher, having recently been burned. Others wait and wait for that perfect time to enter a stock, while watching it climb higher and higher, only to hesitate to pull the trigger entirely for fear they already missed out. These two examples alone can lead to a continuous cycle of underperformance, and worst of all, steady losses. The last several years encapsulate precisely why investors must try to leave their feelings behind. The first four months of 2022 were undoubtedly rough for the market and most investors. Recent conditions are scaring investors and driving many to the sidelines. But Don't Let This Happen to You Just think about all of the investors who sold out of their positions on the way down or near the bottom of the initial covid-19 crash in March 2020, only to see stocks rebound to fresh records by the end of the summer. Many investors likely missed most of, if not all of the ride back up, based on a combination of lingering fears and waiting for the right time to get back in. Unfortunately, exact marketing timing is nearly impossible to achieve because peaks and valleys are really only identified in retrospect. Yet, as an untold number stayed on the bench, having likely been burned by the last market drop, fortunes were being made as stocks ripped higher. Those same investors who were afraid about getting back on the horse right away eventually got in just as things were getting frothy again in the fall of 2021. Wall Street winners operate in almost the exact opposite fashion. They run their trading and investing in a stoic manner, blocking out all of the noise to do what they know works, over and over again. They utilize everything at their disposal, from data and analytics to history and backtesting to cash in now and down the road. Thankfully, everyday investors can attempt to match their success by following the same tried-and-true, data-driven methods with the help of computers. Continued . . . | ||||
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| Trade and Invest with Confidence Understanding what works and following through with those repeatable, proven tactics will help anyone become an accomplished, successful investor or trader. Once you know your strategy is proven to pick winning stocks and can stand up under the pressure of down markets, thrive during good times, and succeed everywhere in between, it must be put to work. With computer-tested strategies, investors can be confident their tactics work. This confidence, backed by data and computational power, empowers traders and investors to take decisive action. As investors see their methods turn into profits again and again, they will likely start implementing them more and more. And the next thing you know, you are the person consistently executing great trades and making money on Wall Street. Strategies that Have Stood the Test of Time Today, Wall Street is run by and won by computerized or algorithmic-style trading. Traders and big investment firms utilize complicated and intricate models to verify that their strategies work consistently during bull runs and downturns. Traders create unique strategies with an array of criteria built in to select stocks. One of the key ingredients in all of the best computerized methods is backtesting. Past performance is no guarantee of future success. But until we can time travel or accurately predict the future, understanding what has already worked over extended periods of time remains foundational. A simple example is as follows: why would anyone want to invest with a fund or stock picking strategy that has repeatably underperformed the market and consistently lost investors' money? On the other side of the coin, it's very easy to understand why traders and investors return to methods and strategies that have proven their worth for years by posting strong performances and helping make investors money. Now it should go without saying that there are no such thing as guarantees in the market. In fact, even the best investors and the top-ranked algorithmic models will execute losing trades. The goal is, of course, to shoot for as close to perfect as possible, but even the best strategies 'only' have win ratios of 60%, 70%, or even 80%. No one bats 1,000%. But the top players on Wall Street sleep easy at night knowing their stock picks carry a high probability of making money. Those Who Hesitate Are Lost Clearly, there are no certainties in life or the stock market. But there is also little need to second guess, back out of trades, and constantly change up your stock picking routine once you have honed in on a proven strategy that outperformed in both bull and bear markets. This is why the most successful, strategy-focused traders and investors feel confident driving the long and winding road of the market through any weather. They know that the stocks that come across their screens, whether they are 'buys' or 'sells,' have been vetted and backtested for countless hours, with regular updating and quality control. This means there is no need for one last chart, ratio, article, or market overview. Knowledge is power and nothing beats rigorous preparation. And the best part is it allows anyone to execute that next trade without fear or hesitation in down markets or soaring bull runs. Emotion-Free Trading Today We've created such an approach with our proven strategy that incorporates the best Zacks Rank stocks, the top Zacks Ranked Industries, and a special combination of various Growth, Value, and Momentum style inputs that have shown extreme profit potential. We call this secret formulation the Zacks Black Box Trader. Best of all, there is no human bias to this computer driven and operated strategy. Just a straightforward, quantitative model that has beaten the market. Black Box applies the best time-tested analysis to every stock that comes through. And it automatically does this each and every time so you don't have to. Every Monday, you'll be signaled which stocks to buy (and which to sell) with the highest probability of success. Remarkably, it only takes a total of 5-10 minutes trading each week to enjoy the gains. Whether you're a seasoned trader or brand new to the market, I know you'll enjoy approaching the market in this entirely different and unbiased way. Last year, this "Black Box" strategy beat the S&P 500's +28.7% performance with a stellar overall gain of +43.9%. And so far in 2022's volatile market, it's averaging a double-digit winner every 12 trading days and closing gains as high as +42.9%, +37.0, +19.5%, and +12.9%, in as little as a week.¹ This is an exceptionally good time to get set for our Black Box stocks. Its latest auto-selected picks will be released this coming Monday, at 10:05 am ET so you can be among the first to see them. Look into Black Box Trader by Sunday, May 15 and you may also download our Special Report on how to pursue outsized profits from the current chip shortage crisis - One Semiconductor Stock Stands to Gain the Most. This small-cap is one of the rare thriving manufacturers - and it's ramping up with a new partnership in a new market. From 35 semiconductor stocks, you can get an early look at Zacks' top pick. Thanks and good trading.
Ben Rains is a Zacks Rank expert, noted for applying the algorithms and strategies that help individual investors achieve success. He manages the market-beating Black Box Trader. | ||||
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| ¹ The results listed above are not (or may not be) representative of the performance of all selections made by Zacks Investment Research's newsletter editors and may represent the partial close of a position. This free resource is being sent by Zacks.com. We look for investment resources and inform you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms of Service". https://www.zacks.com/terms_of_service Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research is not a licensed securities dealer, broker or US investment adviser or investment bank. The Zacks #1 Rank Performance covers the period beginning on January 1, 1988 through February 28, 2022. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank #1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance_disclosure for information about the performance numbers displayed above. Zacks Emails Zacks Investment Research |
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