Page 1134 - How to Make Money in Stocks Trilogy

120 HOW TO MAKE MONEY IN STOCKS—GETTING STARTED

Use a 3-to-1 Profit-and-Loss Ratio to Grow—and Protect—Your Portfolio
Trade Amount Invested % Gain/Loss $ Profit/Loss Total Value

#1 $5,000 –7% –$350 $4,650
#2 $4,650 –7% –$326 $4,324
#3 $4,324 +25% +$1,081 $5,405
(8% overall gain)

As I noted earlier, everyone makes mistakes and takes a loss sometimes.
But if you cut all your losses short, you won’t make any big mistakes.
And look what happens when your batting average improves. The table
below shows how if you were right just 60% of the time (3 winners and 2
losers), you could walk away with a solid 69% profit.

Compound Your Gains and Minimize Any Losses
Trade Amount Invested % Gain/Loss $ Profit/Loss Total Value
#1 $5,000 –7% –$350 $4,650
#2 $4,650 +25% +$1,163 $5,813
#3 $5,813 +25% +$1,453 $7,266
#4 $7,266 –7% –509 $6,757
#5 $6,757 +25% $1,689 $8,446
(69% overall gain)

So be sure to use the Buying Checklist to get into quality stocks at the
right time, then follow this basic selling game plan to lock in your gains and
limit any losses.
By doing that, you can start delving into the market with confidence,
knowing you’re safeguarding your money from undue risk while also laying
a solid foundation for compounding your profits over time.