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What Does it Take to Beat The Market?

26 July 2018 No Comment

It’s a straightforward goal: investors trade to make more money. But, as newcomers quickly learn, it’s not that easy to achieve gains. Without a psychic sidekick to guarantee your success, you can easily fail to predict changes in a particular stock or market sector and end up with unfavorable results.

Investing may have some similarities to gambling, but if it’s a game, it’s one where it pays to know the rules. You can move the odds in your favor by accessing more information. In theory, if you had enough information and understanding of the market, you could consistently make money trading. The trouble is that there are so many dynamics to keep track of that you may not have the time, energy or access to monitor all of them. Narrow down your focus to a specific niche like currency trading or a particular business sector to start with and then build out to a wider portfolio at a healthy pace.

For instance, if you’re thinking of investing in stocks related to a specific company, you would want to start by researching their historical operations and successes, assessing their current plans for the future and cross-referencing that with external projections for their success. You’d also want to look at their leadership’s track records, their competition’s movements and the likelihood of their products or services competing well over your investment period, which means you need to understand the customer base and full market sector.

Even though this encompasses at least a functional understanding of what contributes to good production, marketing, human resourcing and leadership in order to assess these factors, it’s far from everything you’d want to be aware of in order to make a fully informed trading decision. You also want to step back from the granular data and look at the wider market forces at work, how international trade might impact things over time and how local, regional and geopolitical changes could affect your investment.

Needless to say, that’s a lot to keep track of for every investment – possibly more than a full time job. Therefore, successful investors look for ways to access the information they need to make good decisions with greater efficiency. If you can find a reliable regular markets update that brings your attention to the elements you need to know, and possibly some expert advice on what that information could mean for investors, you’re ahead of the game.

Instead of learning about every area of business practice, global economics and politics, you should focus on assembling resources that aggregate, filter and process the raw data for you. There are no guarantees in investing, but informed investors have the best odds of beating the market. The more access you have to good information and the more you understand, the more likely you are to accurately anticipate shifts in the market and invest or divest of funds at the most beneficial point in time.

Try focusing on a contained area of investing to cut back on the overwhelming avalanche of information to process. Find trustworthy and valuable sources of information and assessment related to your niche area, and then put it to use to gain a deep practical understanding of your investments to get the most out of them.

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