Five words you should ask before you make any investment or trading decisions

Julie Brownlee, Fsp Invest, 06 Jun. 2014

Tags: investment decision, trading decision, investment, potential losses, how much can i lose, investment strategy, strategy

It can be difficult weighing up every investment or trading opportunity that comes your way. But there’s a very simple way to weigh up the risks involved, and whether you want to pursue the investment or not. So let’s take a closer look at these five special words…

Make this question the first step in your investment strategy

This simple phrase of five simple words works in all realms of investing. Be that investing in property, investing in a small business, investing in blue-chips or short-term trading.

Asking yourself this question is the real secret behind making money on the markets. Before you make any investment decision, make sure you ask yourself these magic words first, Brian Hunt in The Crux explains.

The special five word phrase is: How much money can I lose?

Whatever the investment or trade is, you should ask yourself this first. It’s a sure way to make sure you focus on the risk involved with the investment. Once you’re happy with that side of the equation, then you can get onto making money.

Always look at potential losses before potential profits

Many investors, especially those that are new to the markets, are obsessed with making money. They’re only concerned about the upside.

But it’s the downside that you should worry about first. Not how much money you can make investing in your brother’s new restaurant or a forex trade.

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These investors don’t think about how much money they can lose if the investment doesn’t work out as planned.

Before you commit any money, you need to ask yourself first how much you can lose. Looking at it this way and evaluating the risk may stop you making very risky moves with your money.

So there you have it, five words you should ask before you make any investment or trading decisions.

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