The stock market has been fairly flat since the beginning of December, and that means its a good time to assess your relationship with your investments.No matter what your market prefrence is from stocks to Forex, it’s a great opportunity to consider how things have worked for you in the past and what you can do moving forward.

First, ask yourself why you trade in the first place. What is the reason behind your specific strategy? Maybe your strategy is to hand your money to a major broker like Smith Barney, AG Edwards, Fidelity, or any of the others. Does that indicate your underlying motivation is to not deal with investing… to just give your money to someone else and let them hopefully make money for you. Maybe your strategy is to put your money with a company like Scottrade, eTrade, or Ameritrade and actually make the trades yourself. Are you doing that for the
thrill of winning and losing kind of like being in Las Vegas? Maybe you do it to have something to impress your friends with. It’s important that you be aware of your underlying motivations. The ones beyond the knee-jerk response of wanting to make cash.

Now is the time to put together a winning trading methodology. Get ready for the upturn in the market. Here are a few tips.

No matter what your motivation is for trading, you’ve got to get your emotions out of the picture. If you get excited when you win and sink into the pits of depression when you lose, then you will see that you lose and lose and lose.

Next, decide on your target objectives for trading. Here are some things to consider. How much time are you ready to spend onyour investments? How much annual return do you want to make on your investments? How much risk are you willing to take on the money you invest… in other words, how much are you willing to lose? How much time and money are you willing to spend learning to invest? Come up with a statement of objectives in the form, “I am ready to invest ­­____ dollars and I am looking for a ____ percent annual return on my investment where I spend ____ hours per week/month managing my investments after spending _____ hours and _____ dollars learning how to invest.”

Next, come up with your overall investment strategy for moving forward. Are you going to put your money in a bank? Are you going to put some money into guaranteed municipal bonds and some into mutual funds? Get specific about how you intend to reach your objectives.

Before you actually invest a dime, you need to have an investment plan. The investment plan defines when you will actually put your money into an investment and when you will take your money out of an investment. If you are investing in a stock, then this plan will tell you when you should invest in the stock. What value should it be at? What should it’s recent history look like? Does the performance of the stock meet certain technical analysis criteria? Does the company meet some fundamental analysis criteria? Your plan should also tell you when to sell the stock. That tells you the risk you are taking.

Now, the trick is to follow the plan no matter what happens in the market… and this is where the Vulcan mind comes in. If you prepared your plan correctly, then if you follow it to the letter you will get the results that you seek. It’s really strange though, that most people stop following their plan. The winning technique consists of three steps. Follow the plan, follow the plan, and follow the plan.

After you exit the investment, then you need to do a de-briefing in your own mind. Take a look at what happened, how your plan served your objectives, and what you could have done better. With this simple analytical approach to investing you will be much more successful no matter what your overall investment strategy.

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