How It Started... -

I first started my long term investing portfolio 7 years ago, and I’ll be honest, I did lose money at the beginning. This is not uncommon for new traders, however, with research and perseverance I am proud to say I am not only profitable, but this year I hit 111% return on my portfolio in 2023. Yes, I know, this fluctuates daily, however over the last 6 years I have averaged 44% return on my investments… (smashing UK saving accounts returns out of the park!) I am hoping that this blog can help consolidate the key information you need to become a profitable trader and therefore, avoiding making the same mistakes I did!

To look a little deeper into my investing stats click here

My Trading History

The difference a plan makes…

I felt like the ‘’about me’’ section above doesn’t accurately represent who I am as an investor. So, I wanted to write a little something about how it all started and how it’s going now.

I’ve been trading for a while now on Etoro, 7 years in fact. And like most of you… the start was rocky.

I was drawn to Etoro as a platform after finding other brokers overly complicated and daunting. Etoro made investing look easy and I loved the social aspect. Still to this day, that is my favourite thing about the platform. For anyone that follows me there, you will know I’m a chatty catty!

I got swept up in my initial success way back in 2017 with a banger 118.18% return. Little did I know the market was about to tell me exactly who was boss. In 2018 I lost 95.27% of my portfolio. Brutal. My one saving grace was it was a relatively small account back then, even though it felt like a lot at the time.

Why did this happen?

The simple answer, I was overly confident that I could pick good stocks just looking at simple metrics like price targets and sentiment. This works fine in a bull market, for a while at least…

The long answer:

I used too much leverage.
I had zero risk management.
I had no long-term plan.
I didn’t know how to evaluate a company or read an income statement.
I held stocks despite not understanding what the company did.
I didn’t know how to build a portfolio to suit my personality.
I chased losses with more risk to try to recover my losses.
I had no patience and I failed to learn from my mistakes, for a whole year!

How did I fix it?
I had a long hard think about what I wanted to achieve in the markets, I realised I wanted to be able to find companies with a lot of potential to make large price moves that I could understand. I didn’t want to just buy assets that would give me 1-10% returns in a year, that would just grind higher as they were stable business models. I could just DCA (Dollar Cost Average) into an index for those returns but I felt I could do better. I wanted to double my account as many times as I could in my lifetime and provide for me and my future family more passively. I admit my goals were lofty at this point!

Throughout Christmas at the end of 2018 I watched/read a ridiculous amount of content. I would listen to audio book or have something playing on YouTube, even when I was driving or doing some very bad cooking. Here’s the broad strokes of my game changing trifecta:

I learned how to value companies and create my own projections.
I created technical analysis charts that included price structures/patterns.
Macro overview.

It’s important to do all your own research from as many sources as possible when looking into a company. It’s not just about numbers, so if creating complex spreadsheets isn’t in your wheelhouse yet, you could learn how to read balance sheets and income and cash flow statements etc. Some points you could consider, is to look into:

Social media news and how it affected the company.
Ongoing lawsuits, if there are any.
Companies Management, what is their history at other companies and how have they driven this company forward?
The pay structure for CEO compensation. For example, I prefer to see target driven rewards than huge pay-outs that are disproportionate to the company’s earnings.
What is the current institutional ownership currently – When the big investors buy up stock, price can move rapidly.
Is the business easy to disrupt- Do they have a moat or is it a duopoly?
Is it oversold/overbought compared to others in its sector – You could use P/E for this.
What is their product like – Test it out or ask people who use it how they feel about it.
Read any short reports that have been posted and check the data cited is accurate.
What’s is their current short interest – This could create upward price movement in the right circumstance.
Do they have insider ownership – Personally I love to see CEO’s that buy/hold huge chunks of shares.

There’s a lot of other research you can do to build a picture of a company. After a while you will find the criteria which works for you.

To read charts, I use the indictors below, that help me figure out the potential price movement.

Resistance Levels – Lines drawn on to a chart for finding trends and patterns.
Volume profiles – These create strong resistance and support areas at prices traders like to buy and sell a stock.
Learn Fib and trend-based Fib to help identify where price will move.
Relative strength index (RSI) is very helpful for showing the speed and change of price movements, but you should use this on a per company basis. Some companies will have a price action that doesn’t mind being oversold for long periods…. Others will bounce right back down after it gets overbought.
Volume, this will tell you when buying/selling pressure has started to fade.

You can find more about the technical analysis I use here.)

In summary knowing how to read the fundamentals of a company tells you what to buy, knowing how to read a chart tells you when to buy; and when to sell.

Macro Economic Conditions

It was also important that I learned how to look at the market overall . I didn’t want to get blindsided by another bearish cycle that I no doubt used too much leverage in. The drop at the end of 2018, was a rude awakening how important it is that I know how things are going from a macro point of view. It helps tell investors when to be more risk on and take large positions in more growth related stocks. It also informs when you need to pull back and be more conservative by holding more cash, or picking safer investments that do better in those types of markets. It can also help inform you which sectors are likely to do well or not so well during that period.

The main thing that dawned on me, was that I needed to spend a lot more time looking into investments I believed in and building a plan around that thesis. I then combine this with a few other assets, to build a portfolio I could really stand behind, with an approach to risk that is comfortable to me. Be mindful this is much harder to do as a newer investor, as you may be more emotion driven when seeing long/large drawdowns. This can push you into riskier trades to try and make money back, or leave you bag holding, wishing for a reversal.

Once I combined all of this into the ‘’strategy’’ that I use today, my investing took on a life of its own. I have only had one negative year out of 5. I even learned to love pullbacks in the market – Those drops are a true gift! They fit my trading style perfectly, there is so much potential to find companies with strong numbers at honestly… ridiculous prices. Time is your greatest edge in this situation and patience is key. You can ride some crazy gains by finding some gems during those times, and price action can go higher for MANY years after.

Since I implemented my strategy, my account has grown 570.05% over 5 years. That works out to 42.07% annually. Which is far better than the than measly 10% gain newer traders are led to believe is the best they could expect. You can track my trading stats for free on this website, or follow my page directly on Etoro.

Click here to see an overview of all my portfolios