July 15, 2021

How to win on the stock market?

In this article you will find the best techniques to win on the stock market, maximize profits and minimize losses.

I would like to comment on the most important factors when it comes to to invest to increase our chances for win on the stock marketThere are numerous posts or articles that I see where they analyze any action and give a buy or sell order simply when to achieve an efficient investment or strategy it is not enough to locate a share that is going to go up or down, it already happened to a Nobel Prize winner d economy where he predicted stock movements with high percentages (because of this he was awarded the nobel prize) but his investments were ruined, why? Why is it that knowing high percentages of predictions destroys all your capital? I will explain it clearly and simply in the following paragraphs.

To begin, I would like to make it clear that there are several factors that influence our investments and strategies and that most people do not take into account, possibly if you are an investor it is one of your factors that prevents you from maximizing your profits or even if you are a good investor said factor will destroy your capital.

The problem is in capital management, how much to invest and how to invest it, for example suppose the game of heads or tails, we flip a coin, if it comes up heads we win double the bet and if it comes up tails we lose the investment, we have € 10,000, how do we optimize the strategy knowing that we have the 50% of chances to win or lose? (as long as it does not fall on edge 🙂).

We can make the mistake of investing large amounts since with this we can earn a lot but this strategy has a serious problem and that is that a losing streak will drive us out of the market just like in the stock market, to avoid this a strategy is made where we lose systematically , that is, we invest taking into account that we are going to lose and this is done by investing, for example, the 10% of capital, so if we realize it is practically impossible for them to kick us out of the market, I put an example of each strategy to see it clearly .

How to make money investing in the stock market

We start with € 10,000, we double or lose the investment.

No Capital management.                                              With Capital Management.(10%)

InvestmentStrategyTotal CapitalInvestmentGainTotal Capital
2.000we lose8.0001.000we lose9.000
2.000we lose6.000900we lose8.100
2.000we won8.000810we won8.910
2.000we lose6.000891we lose8019
2.000we lose4.000802we lose7217
2.000we lose2.000722we lose6495
2.000we lose0649we lose5846

This table shows a losing streak, in a winning streak the investment with capital management would increase, each time we would earn more.

Since we never always win, a good capital management would benefit our system up to 40-60%, therefore a good strategy always leads to good management, but it is not a good strategy, also clarify that a good technical analysis of Buying or selling shares is also important but as we can see a fully optimized investment leads to a strategy with good technical analysis of the shares and good management, one without the other is useless.

This strategy is called "losing systematically", something that we must learn before even investing in the stock market or making our predictions about stocks or indices, well understood the concept and carrying it with enough discipline (discipline is another important factor of which I will comment in future articles) we can obtain benefits even with a mediocre system that wins in 50% of cases (including commissions since the stock market is not a game with positive hope despite being sold like that), for put an idea, my system wins between 70% and 80% (trading system) that together with this capital management makes an unbeatable system.

I encourage you to comment or ask any questions in this post, which will be answered and discussed to learn day by day and improve yourself.

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