Successful trading – the most important trading tips from allgorite
“Buy some shares and take some sleeping pills.” This piece of advice from Germany’s stock market guru André Kostolany, who died in 1999, has long become a thing of the past. In order to be successful on the modern stock market, your portfolio must be managed actively. This is especially true for trading with allgorite.
Order codes have been an integral part of successful stock exchange trading for such a long time. They determine how to purchase and sell stocks. To help you implement allgorite’s recommendations successfully, we have compiled the most important order types and trading tips, just as we use them in our test programs and live trading.
Using trailing stop-loss
Trailing stop-loss (TSL) has been a true innovation in stock trading order codes. Almost all brokers offer it nowadays. It is a sell order similar to a conventional stop-loss – only that the price is not fixed in advance. Instead, the sell limit is automatically adjusted upwards when prices rise. In the process, the TSL follows (trails) the share price performance by a percentage or absolute loss amount individually set by you. If the price falls below the limit you have set, the sell order is triggered.
This makes the trailing stop-loss order an excellent tool to limit potential losses from the outset, yet at the same time, benefit from rising share prices. You can kill two birds with one stone by issuing a TSL order right away when purchasing a share: Potential losses are limited to your preset loss amount from the very beginning and you can profit from rising valuations until there is a corresponding decline in prices. TSL is recommended for allgorite customers who want to trade successfully. Alternatively you chose the right moment to sell from your experience and intuition.
Losses hurt – especially when it comes to money. Many investors therefore try to ride out losses, at least until they have been compensated. Experts know that this in an error. After all, not every purchase is immediately profitable – even if it has been recommended by allgorite. Therefore, it is essential to cut losses quickly and consistently. Regardless of whether or not you are an allgorite customer: In order to protect your capital on the stock market against drops in price, you should place an automatic sell order immediately when you buy the shares.
As a private customer you know your risk profile better than anyone else and can act accordingly.
How you deal with risks and your concrete trading strategy depend on the current market situation and your personal risk profile. The possibility of losses might be annoying, but success on the stock market it is not about each single stock making a profit. In the end, what really counts is the performance of the overall portfolio.
“Let profits run, cut losses short” is an often-heard stock market expression. But that is easier said than done. All too often, the human mind likes to play a trick on us – and we simply let the profits run until we finally end up in the red.
We consistently focus on risk minimization and securing profits. If you like, you can set a higher TSL from the outset to prevent the share being sold due a down-swing. If the price rises, you may reduce the TSL to protect accrued profits against falling valuations. This ensures a minimal profit in the worst-case scenario – but a profit nonetheless. If the price rises, profit rises. At the same time, risk is reduced.
In highly volatile market situations it might be better to avoid unnecessary losses, and use a broader Stop-Loss of e.g. 10 percent. This might increase the risk temporarily, but most of the time proves to be the right strategy, as shown in our long-term tests and live trading has proven.
Many investors, however, prefer significantly more “generous” margins. Especially if you specify a larger margin, it is advisable to reduce TSL gradually when prices rise in order to secure accrued profits against falling valuations. This allows you to gradually make additional profits.
Whichever your personal trading strategy might be, we recommend that you stick to it.
It is to be said that instead of waiting for the jackpot, you should go for more frequent, smaller profits, which will also reduce your risk of loss.
Along with our buy recommendations, we give a recommendation regarding when to set the TSL. A P-TSL of 2% in our recommendations means that after profit level of 2% above buy is reached, we reduce the TSL to 1%. We use the internal name P-TSL where the ´P`stands for profit.
Do not put all your eggs in one basket. This is an important principle that applies to much more than just the stock market. Spreading the invested capital is therefore a key success factor and risk minimization tool. Many customers of allgorite daily do not risk more than ten percent of their total capital on one security. allgorite weekly customers, who get a smaller number of buy recommendations, allow a maximum split of 20 percent.