All Great Investors Know These Two Things

Shah Gilani

If there's one thing new investors aren't short on, it's advice. There are so many "investing adages," "Wall Street adages," and other golden nuggets meant to guide investors, it's overwhelming.

There's some truth to all of them, and they all have their place for investors who might find themselves facing a difficult situation.

But here's the thing – none of them really help investors make the most important investing call: the decision to get started. It turns out investors often find that figuring out the market isn't nearly as important as being in the market in the first place.

Fortunately, whether you're an absolute, rank beginner or someone who's been sitting this bull market out on the sidelines, I've got some help for you.

Here it is…

"You've Got to Be In It to Win It"

Sounds easy, right? That's because it is.

In fact, I'll prove it to you right now, and you'll not only have the confidence to start investing, you'll wonder why no one ever told you this before.

In order to be totally comfortable investing – and I mean absolutely completely at ease with it – you only have to know two things. Everything else you'll learn along the way to becoming super successful.

The most important thing you need to know is that every investment starts with a "trade."

All that means is that no matter how much or how little research you do, or if you're taking a position on something – anything – based on something you read, or heard, or "feel," it's always the same.

Always.

You have to make the move. You have to buy the stock, the ETF, whatever it is you're trading. You have to open a position.

Putting that position on is a "trade."

You aren't investing in that position. You might end up with a fabulous investment, but you might not.

By looking at any position you open as a "trade" and not an "investment," you know you're not "married" to it.

If you love it because it goes your way, go ahead and marry it. But if it goes against you, you simply get a no-fault divorce and dump the position. No entanglements, no tears, just maybe a small loss.

And you move on, a lot wiser, and hopefully not too much poorer, for making the mistake.

Every time you initiate a trade – every time – there are only two outcomes that you face: Either the trade goes your way or it doesn't.

If it doesn't work out, take a small, manageable loss, say 5% or 10% of the capital you put into the position, and get out of the trade – but don't let the fact that you cleverly escaped with a tiny loss go to your head.

I always think like a trader when I put on a new position.

I know I could be right, but there's always a chance the market or the stock does something I don't expect, and the position goes against me.

At least I'm in the game.

You can't be afraid to lose a few bucks. It's part of the game. You can't win a race if you don't run it. You don't start off running. You start off taking a first step. You start off with one trade and – BAM – you're in it.

That puts you halfway there…

Shah Gilani

About the Author

Browse Shah's articles | View Shah's research services

Shah Gilani boasts a financial pedigree unlike any other. He ran his first hedge fund in 1982 from his seat on the floor of the Chicago Board of Options Exchange. When options on the Standard & Poor's 100 began trading on March 11, 1983, Shah worked in "the pit" as a market maker.

He helped develop what has become known as the Volatility Index (VIX) - to this day one of the most widely used indicators worldwide. After leaving Chicago to run the futures and options division of the British banking giant Lloyd's TSB, Shah moved up to Roosevelt & Cross Inc., an old-line New York boutique firm. There he originated and ran a packaged fixed-income trading desk, and established that company's "listed" and OTC trading desks.

Shah founded a second hedge fund in 1999, which he ran until 2003.

Shah's vast network of contacts includes the biggest players on Wall Street and in international finance. These contacts give him the real story - when others only get what the investment banks want them to see.

Today, as editor of 10X Trader, Shah presents his legion of subscribers with the chance to earn ten times their money on trade after trade.

Shah is also the proud founding editor of The Money Zone, where after eight years of development and 11 years of backtesting he has found the edge over stocks, giving his members the opportunity to rake in potential double, triple, or even quadruple-digit profits weekly with just a few quick steps.

Shah is a frequent guest on CNBC, Forbes, and Marketwatch, and you can catch him every week on Fox Business's "Varney & Co."

He also writes our most talked-about publication, Wall Street Insights & Indictments, where he reveals how Wall Street's high-stakes game is really played.

… Read full bio