Stop-Loss Trading Strategy

Stop-loss trading strategy is one of the most popular topics among traders. There is no doubt about importance of this question. A trader may have ten winning trades in a row, still, one loss could wipe out whole earned profit if there were no strategy placed to protect the profit and limit losses. A selection of a stop-loss strategy looks simple from the first view. However, when it comes to a practical implementation, a lot of traders become confused by realizing that it is not as easy as it looks like and it could be even more complicated than generate trading signals. In many cases a good trading system could fail if a stop-loss strategy is not used correctly and a bad trading system could be profitable if a smart stop-loss strategy is used.

A selection of stop-loss strategy is a complicated task mainly because it depends on many factors. Some of these factors are trader's risk tolerance, selected trading vehicle, trading style, stock market behavior, etc...

Risk Tolerance: There are different traders on the stock market. There are conservative and risky players, there are retired people and there are young traders. Everybody have different risk level and in many cases a stop-loss strategy depends on the personal preferences of a trader.

Trading style: Different traders trade differently. One trader makes 5 trades during a single session and another trader makes only one trade a year. Respectfully, the first trader could be looking for tight stop-loss strategy while the second trader could be looking for flexible, less strict stop-loss.

Trading Vehicle: You may trade stocks, options, futures and with any of these tools you would be looking for a different stop-loss. While a stock trader could be looking for constant stop-loss level, an options trader may select two dimensional stop-loss strategy (price and time: the longer you stay in position the tighter stop-loss become).

Stock Market Behavior: The stock market changes constantly. Today you may see quiet peaceful up-trend; in month you could be in the volatile, scary decline. Depending on market volatility a trader may select different trading strategies: tighter during quiet markets and more risky during volatile periods.

Investment Property Mortgages

Investment property mortgages are used where an investor is purchasing an investment property with the intention of renting it out to tenants in return for a monthly rental income.

Many people are now involved in buying and selling investment property and as a result, the range of investment property buy to let mortgages has significantly grown. The investment property mortgages have become more widely available with some lenders offering buy to let mortgage products with up to 90% loan to value. If you can purchase investment property by using just 10% of your own capital this can result in the landlord being able to buy more investment property than before when the industry standard for buy to let mortgages was 15%.

Investment Property – Do your Research

With more sophisticated products available for investment property and the demand for rental property continuing, landlords are tirelessly looking for ideal investment property for sale. Finding investment property for sale can be a time consuming exercise but the most successful investors will constantly be on the look out for the best deals on discounted investment property. An established investor will always be researching areas identified as property hotspots where they can be the first to invest in an investment property. Investment property in regeneration areas can be equally as good but remember it can take time before these investment properties deliver a substantial return on your investment. Investment property in good areas, with strong rental demand will always be a winner if you are looking at good investment property potential.

Investment Property – Flat or House

Should you buy a flat or a house as an investment property? A question often asked but there is no right or wrong reason. Property investors buy investment property for different reasons. Some may buy investment property in their local areas whereas others may buy investment property further afield. A house as an investment property may present a wider choice of tenants. For example a house bought as an investment property could appeal to a single person, a small family, professional couple, elderly couple etc. A house is more likely to be freehold so avoiding annual service charges. A flat bought as an investment property is more likely to appeal to professionals who don’t necessarily have time to maintain gardens or have children. So for these reasons it is important to identify the best investment properties in the area and where the biggest demand for tenants is.

Investment Property UK

In the UK, property owners and those with investment property have enjoyed significant capital appreciation on their residential and investment properties. With prices doubling and sometimes trebling in some areas over the last 10-15 years, this is reason enough to look at buying investment property.

Investment Property – Repossessions

However, it cannot be ignored that with rising interest rates, this has resulted in a higher number of property repossessions coming to the market in recent months compared to the levels this time last year. Repossessed property can be a prime area for landlords and property investors to pick up good quality discounted investment property. Some may even give the current occupant the opportunity to rent the investment property back from them and the landlord retains the property as an investment property.

Investment Property – Renovation Property

Investment Property requiring work. Those with a skill or an eye for a bit of DIY are also able to capitalise on investment property as there are always properties coming on the market requiring modernisation that can be excellent investment property opportunities. It’s important to buy investment property at the best possible price and budget correctly for the works required. A good buy to let mortgage broker may be able to offer some excellent investment property options on the funding of these types of investment properties. The ideal solution would enable the investor to refinance the investment property immediately on completion of works to release the profit acquired so that the investment property could then be let and the released funds to go towards more investment property.

Investment Property - Buy to Let Mortgages

Buy to let mortgages for investment property have played a significant role in landlords and property investors being able to purchase more investment property for their investment property portfolios. The buy to let mortgage market for investment properties has become increasingly competitive and in line with rising interest rates, there has been more emphasis on developing products for investment property that assist landlords to continue to grow and finance their existing and new investment properties. Previously there was the requirement to get at minimum of 130% rental cover for investment properties, but some products carry a calculation of just 100% and others where there is none.

Investment Styles

The three investment styles are conservative, moderate, and aggressive.

Again, your risk tolerance and investment goals come into play, when choosing the right investment style. If for instance, you realize that you have a very low risk tolerance, naturally, your investment style will definitely be conservative, or at best, moderate. However, for those with a high risk tolerance, moderate or aggressive investment might be the best choice.

Also, your investment goals could determine your investment style, especially when you believe that risk tolerance does not constitute a determining factor. If for instance your investment is basically targeted at saving for retirement and you are still in your twenties. Obviously, there is nothing to rush about. Conservative or moderate investment could be the right choice. However, if you are concerned with raising money to buy a house in a year or two, you are definitely going to be an aggressive investor.

Let's look at these styles of investment. Conservative investment, just like the name implies basically involved gradually building profit over a long time. Here, the major concern is ensuring that the initial deposit is recovered. In other words, when a conservative investor invests $10,000, he wants to be sure that he will get his $10,000 back, no matter what happens. Conservative investment usually involves investing in common stocks and bonds, interest earning savings account and short term money market accounts.

A moderate investor has a higher tolerance for risk. While a moderate investor will more likely invest like a conservative investor, he is also more likely to reserve a portion of his investment funds for higher risk investments. So, let's say a moderate investor has $10,000 to invest, he is more likely to invest $5,000-$6,000 conservatively, and the remaining sum in higher risk investments.

An aggressive investor understands the rules of the game quite well. He is willing to stake his money to get back some quick profit or lose it all. So, he is capable of taking risks that the average investor won't dare take. Although, aggressive investors do invest conservatively too, however, they stake greater amounts of their money in riskier ventures, usually in the hope of achieving larger returns immediately or over a period of time.

As you can see, your investment patterns largely depend on your goals and tolerance for risk. But it is pertinent to state that whatever investment style or plan you choose, it is a good idea to get yourself acquainted with all the facts and risks involved with the investment. Knowledge makes for better and safer investment.