Money creation in the stock market is made from CONCENTRATION. That's right. Trading the very best stocks at the right time with enough capital to make a big difference.
You must go from wealth CREATION to wealth maintenance in this game. Unless you plan on "investing" for the next 25+ years and building wealth slowly.. this is my plan of how you can make millions in the stock market:
In Darvas's book "How I Made $2 Million..."
How many looked at his position sizing? In his early trades Darvas only trade 1 or 2 stocks at any one time on MARGIN! Only when he got up to over $500,000 did he start diversifying a little. Most people overlook these facts.
MY Momentum Stock PLAN:
CONCENTRATION BUILDS WEALTH
DIVERSIFICATION MAINTAINS WEALTH
END GOAL:
$2 MILLION+ ACCOUNT MAKING 20-30% P.A
Start with:
$50,000
Trade 2 stocks with half capital in each.
RISK Per TRADE = 5%
When at $100,000 Trade 3 stocks with 1/3
capital in each.
Risk Per Trade = 3%
When at:
$500,000 Trade 5 stocks with 1/5 capital:
Risk Per Trade = 2%
When at $2 Million Trade 8 stocks with 1/8 capital:
Risk Per Trade = 1.25%
You first have to create wealth in order to maintain it. Whilst trading only two stocks at a time may be deemed to “risky” by the “professionals” you must be very selective on the stocks you trade. Quality beats quantity. Especially when you concentrate so much.
This is the only way a small account can break into the big time. You must not only focus your efforts in the early stages but you must also only trade the top 0.1% of stocks in the market and get your timing SPOT ON.
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Source: www.articlesbase.com
