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Two Steps For Making Investment Decisions Easier by scaredycatguide

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hive-167922 · @scaredycatguide ·
$21.37
Two Steps For Making Investment Decisions Easier
The lessons you learn over years of investing are invaluable. The power of simplicity as rule for investment decisions and strategies is one of those lessons.

This is something I have spoke about before, in a post from a couple years back.  It is time to revisit the idea.

### Two Steps For Making Investment Decisions Easier

![image.png](https://images.hive.blog/DQmbnSbZkiizCe5AbMn6QWkFAGJJLXdrwCo9F49kLwQHCYn/image.png)

In my experience there are really just two steps that should guide and define all your investment and trade decisions.

#### 1.) Know your Goal
Why would you ever invest in anything if you do not know exactly what you are looking to get out of it and how you will exit it when that goal is reached?

You see this more in active trading as people just jump in and out of stuff aimlessly with no clear target in mind. However, you see it happen in my illiquid investments like real estate too.

You have to know what the end goal is before you enter an investment otherwise I promise you that you'll be changing it on the fly and making emotional decisions on the fly.

It is not rocket since. Say for instance you are entering into a trade on bitcoin - is it a swing trade, a day trade? What are your upside and downside targets? Are you going to hold for one of those or look to book profits on a daytrade?

These questions seem so trivial, but they are actually very much a key to success.

#### 2.) Define and Accept Risk
If you do not define what the risk is on an investment then a couple things happen. First, you leave yourself open to unknown exposure and then will have to make emotional decisions on the fly. Second, you cannot accept the risk because you don't know what the heck it is!

Accepting the risk on a trade or any investment is paramount before entering it. If you do not truly accept the risk then you will not have the fortitude to stick with the plan and get to your goal.

I know this from my own experience and from years of watching others do it. Truly accepting the risk on an investment liberates you to make logical decisions based on the information.

*This is all my opinion and what works for me.  Not financial advice, make your own decisions.*



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vote details (392)
@acesontop · 
I have yet set a goal on my crypto portfolio. It used to be some 30-40x my entry point, but I guess I'll have to lower that and set a DCA goal, like something from where to scale out. 

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@scaredycatguide · 
I have to set a new goal.  I reached my initial one set back in 2018.

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@beerlover · 
<div class='pull-right'>https://files.peakd.com/file/peakd-hive/beerlover/yiuU6bdf-beerlover20gives20BEER.gif<p><sup><a href='https://hive-engine.com/?p=market&t=BEER'>View or trade </a> <code>BEER</code>.</sup></p></div><center><br> <p>Hey @scaredycatguide, here is a little bit of <code>BEER</code> from @pouchon for you. Enjoy it!</p> <p>Do you want to <a href='https://friends.beersaturday.com/'>win <b>SOME BEER</b> together with your friends </a> and draw the <code>BEERKING</code>.</p> </center><div></div>
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@diamondray2020 ·
$0.03
I think one of the key to successful investing is to have clear trading plan. Its like a roadmap to refer to when the market swing against you. 

Clarity is power and especially true in investing. 

The other factor is never make an investment decision base on emotion. It definately can mess you up big time.

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@fabian98 ·
$0.03
I have known of people who invested a lot in crypto, and even got into debt with the idea of becoming millionaires quickly and lost everything for not knowing which is the best course and not knowing how to make well thought out decisions.

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@pouchon · 
I think be discipline
will help to know your way
around the market.
This is serious factor to apply 
the two factors presented before us.

!BEER

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@sodomlv · (edited)
$0.40
I agree with you on the discipline.
The discipline will remove our emotional decision.
If we set the stop loss at 10%, how many people will sell when it reach the stop loss point? I believe that there are some people still decide to hold even they set the target because they don't like to lost feeling

To be successful, I think it's a combination of discipline with 2 points mentioned in the article.

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@beerlover · 
Sorry, out of BEER, please retry later...
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@pouchon · 
Either way it is worth noting
it takes time to build that experience
and kick the emotions away from you.

!BEER

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@shortsegments · 
Solid advice, simplicity is paramount. In options trading we have similar rules, invest 5% of your portfolio in each trade, so you know your maximum loss. Know your exit, usually 33% of maximum gain. Follow the rules for exiting the trade, early if profits show up early. It’s great to have you repeat and emphasize these for all investments.


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