8 Retail Investor Strategies for Stock Market Success


If you’ve been in the world of investing for some time, you probably already know what a retail investor is. For those who don’t, a retail investor is an individual who trades with securities for their personal account.

Compared to investment organizations, they usually deal in smaller amounts and take less risk. In case you’re a retail investor or you’ve decided to become one, becoming familiar with some of the best retail investor strategies out there is a great idea.

With that said, let’s take a look at eight of these that might be exactly what you’re looking for.

8 Retail Investor Strategies You Need To Know

8 Retail Investor Strategies for Stock Market Success
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1# Using multiple research resources

One of the best things about being an investor in 2020 is that there are so many places online where you can learn more about stocks you’re interested in.

Not only that you can research online investment companies but there are experts out there who keep data on how their stocks performed in the past.

This means that if you’re ready to put enough time and effort into it, you can learn everything you need to know about the stocks you’re planning to buy.

Relying on multiple research resources allows you to make more right decisions at the right time, which should give your career as a retail investor a significant boost.

2# Avoiding story stocks

Most new investors who don’t have enough time to do their own research, end up buying story stocks. These are the type of stocks you keep hearing a lot about and everyone seems to have invested in.

They might sometimes work out but it’s also possible that buzz has been generated by those who don’t want your investments to increase in value.

Your safest bet is to avoid this type of stocks and only rely on legitimate statistics when identifying stocks worth putting your money into.

Just bear in mind that this doesn’t mean you shouldn’t keep an eye on what’s going on in the world of investing.

3# Reviewing your portfolio on a regular basis

Investing firms usually have employees who are in charge of keeping track of their portfolio. This allows them to identify both right and wrong moves they’ve made in the past and make the most off of their current investments.

Being a retail investor means you don’t have experts whose job is to review your portfolio. However, that doesn’t mean you shouldn’t do it yourself. In fact, if you fail to review your portfolio every now and then, you could end up missing out on a promising opportunity.

When reviewing portfolio, take a closer look at each of your investments and think about how the current state of the market may affect them.

Reviewing your portfolio on a regular basis

4# Investing based on success

You can collect data on various investing options and try to predict how well they’ll do in the future. Still, that requires you to get your predictions right and choose the right moment to make your investments.

A much safer option is to make investments based on previous results.

For example, take a better look at infrastructure investment funds that did well in the past and consider putting your money into them. The more data you can work with, the better investment options you’ll be able to come across.

5# Choosing quality over quantity

First-time investors often believe that buying low is the easiest way to success. Although you’re not a large investment company that has millions to spend, this isn’t something you have to do.

It’s possible to buy stocks when they’re at their lowest point and still lose money. Experienced investors know that it’s important to take “quality over quantity” approach when making investments and they very rarely buy the most affordable stocks available.

Most of the time, you’re better off buying one moderately-priced stock than buying fifteen cheap ones.

6# Diversifying your portfolio

Ask any experienced investor and they’ll tell you diversifying your portfolio is one of the most important things you have to do when buying and selling securities.

The last thing you want to happen is to have your only investment lose value and make you lose money. If you diversify, you’ll be safe even in case things go wrong.

If you’re a stock investor, you can choose another industry to invest in just in case something affects the sector you’ve already put your money into.

You can also choose some other popular portfolio diversification options such as precious metals and real estate.

Diversifying your portfolio

7# Relying on the gut feeling

It’s not unusual for retail investors to have a good feeling about certain stock they’re thinking about investing in. People usually call this a gut feeling and ignoring it isn’t always a good idea.

Even the most successful analysts out there will tell you that listening to your gut feeling can sometimes mean the difference between success and failure. Of course, this doesn’t mean you should only rely on the feeling you have.

Every investment you make has to be guided by intelligence, at least to some extent.

8# Determining upper and lower limits

Every retail investor out there has, at some point, made a bad investment. This happens quite often and there’s no reason why you should let it get to you. Instead, you have to make sure that it has a minimal effect on your finances.

The best way to do this is to determine a lower limit at which you’re ready to cut your loss. Similarly, you should determine the upper limit at which you’ll be ready to sell a stock for profit.

For example, you can take your profits when the stock moves up 25 percent and cut your loss when it drops 10 percent.

The bottom line

Being a retail investor involves a lot of work. The harder you try to find stocks and other investment options worth putting your money into, the better your gains will be.

Rely on the eight strategies covered in this post and there should be nothing stopping you from making your every investment fruitful. If everything goes well, you can even think about starting your own investment business.

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Author Bio: Marco Lopo