The System Part 1 Secuirties

I will lay out my system over several posts. It is easy to use once you have all the components. It is also very easy to stick to once you understand the whole picture.

The first part to learn is about securities I use. The only securities I trade with are ETF's. An ETF is simply a basket of securities that gives the instant diversification of a mutual fund with three distinct advantages.

1. They trade all day like a stock.
2. They have significantly lower expenses than mutual funds.
3. Most Exchange Traded Funds have options that trade with them. This will be a HUGE benefit for one of my later posts. Stay tuned for the details.

The other key part of my ETF strategy is liquidity. There are dozens of ETF's out there, but only a handful have the liquidity I need for this strategy. My favorite ETF's for liquidity are the S&P Select Sector SPDR's. They give you exposure to specific sectors of the S&P 500 without the single stock risk. Until next time..

Most Important Post

I am going to write this once and re-post it regularly. Not because I am lazy, but because it is the post I wish someone would have written for me while I was "experimenting" and losing a ton of money in the market. I was trying to find the perfect system. I was thoroughly convinced that Wall Street was rigged and I thought there was going to be a way to "beat the system". I have found that Wall Street is rigged. I have also found that the little guy can still make a ton of money. You just need to manage your risk intelligently and have the discipline to make money. That is what I have figured out. The system I use is easy to understand. It is easy to execute. Most importantly, it is easy to stay disciplined.

If you can do two things as an investor, you will make money in the market. Few people can give you any guarantees when it comes to investing. I can guarantee you will make money over time if you do these two things:

1. You must consistently add capital to your portfolio. If you do this, you are always giving yourself a chance in the market. You buffer bad trades with fresh capital and give yourself the chance to add to good trades. Commit to adding a certain amount of fresh cash every paycheck/commission check/month. Even if it is a little bit. Small amounts add up over time.

2. You must stick to your system always, no exceptions. There are dozens of systems that make money in the market over time. The problem for most investors is when the system has some losing days or weeks. Many investors take their losses and jump to the next system. This is why so many people lose money in the market.

Both of these rules require discipline. This is why so many investors lose money. They lack the discipline to be successful. If you can focus on these two rules, you will be successful.