Happy Holidays!

Wishing everyone Happy Holidays! 🎄🕎

I hope you enjoy my chartwork (the Christmas tree is brought to you by the shooting star 🌟 pattern on Carvana's quarterly chart).

As I reflect on this challenging past year, I thought I would post a few of the lessons I have learned trading and investing over the years.

Trading

• Always manage risk by using a stop loss. Consider the asset's Average True Range (ATR) on the timeframe you're trading on. If the distance from your entry price to your stop-loss price is less than the ATR, then your trade is likely to fail (stop loss triggered) simply due to normal volatility.
  
• If feasible, consider hiding your stop loss under large buy orders using level II market data.
  
• Avoid trading on assets with low volume or assets with wide bid-ask spreads.
  
• Consider the tax implications of your trades and consider developing a trading strategy that avoids triggering or minimizes the effect of the wash sale rule. For more trading tips you can read my post linked below.
  

Investing

• Always manage risk by diversifying portfolio holdings. Consider holding a wide array of uncorrelated assets or a broad array of low-fee ETFs, REITs, and/or mutual funds.
  
• When available, always opt to automatically reinvest dividends. This strategy works for investing (not trading) because most assets preserve wealth better over time than holding cash. Buying more and more of an asset over time compounds growth.
  
• Consider the tax implications of your investments. Consider maximizing your investment's growth by using tax-sheltered accounts (IRAs and HSAs) and harvesting tax losses in taxable brokerage accounts.
  
• Only invest in assets that, when adjusted for dividends, move up in price at a faster rate than that which the money supply grows. To determine whether an asset achieves this, compare the asset as a ratio to the money supply. For more details, you can read my post linked below.
  

These are just a few of the many lessons I have learned over the years. I have dozens of pages of tips and lessons learned in my Trading & Investing Notebook. I encourage everyone to keep a notebook.

What trading and investing lessons have you learned over the years? What tips would you give to a beginning trader? Leave a comment below!