How To Develop Your Investing Style

It seems like there is a never ending stream of “get rich” books and can’t miss investing courses out there and to be honest, some of them might actually work.

I’m not sure about you, but I have always believed that in order to actually profit from a strategy, you have to feel comfortable with it. I know there are stock traders out there that make a lot of money moving in and out of stocks, but that was never really my style. I have learned a lot about stock charts and technical analysis from some of these traders and have applied some of their techniques to my own investing. But that’s just it, you have to develop a style that is right for you.

Developing Your Investing Style

I have always believed that no matter what your thoughts are about a particular investing strategy, it is never a bad idea to learn about it. Most publicized techniques combine several data points and have been successful at one time or another. I personally like to learn about various techniques and utilize certain pieces that I feel may help me to make better decisions when buying stocks.

I have combined information from techniques that focus on value investing, momentum investing, swing trading, yield chasing, and growth investing to assist me in purchasing stocks and ETF’s for my portfolio.

Use Investing Elements That Make Sense To You

While understanding all there is to know about an investing strategy from reading a book or two is usually out of the question for me, I can always find a nugget of information that makes complete sense and add it to my stock screening routine.

For instance, reading How To Make Money In Stocks by William O’Neil is about trend trading and momentum trading. However, I have used some of the techniques in that book to understand the relationship between price and volume. I have used this information to develop my own strategies on when to buy stocks that are on my watch list. I have found that O’Neil’s strategies work especially well in up-trending markets where traditional value investing leaves us with few stocks trading at a deep discount.

Combining Data Points For Increased Accuracy

In statistical theory, the more pieces of information (points of reference) that you have on a particular item, the more accurate your results should be. The same holds true with investing in stocks – unless you hold out for more and more points of reference and never pull the trigger on a buy.

The general idea is to combine several different points of reference when analyzing a stock in order to minimize your risk. Use those investment strategies that make sense to you and look for common results from different points of reference. For example: if the chart is showing significant volume buying (showing institutional investors buying large amounts of stock) and both the earnings per share and revenue are growing rapidly, there is a good chance that this stock is going to trend higher.

Your Personality Can Make You Money

If you are a laid back and patient person, you can make money investing.

If you are hyperactive and bordering on attention deficit disorder, you can make money investing.

The key to making any investment strategy work for you is to understand your personality. I personally do not have the motivation (or the patience) to follow stock tickers on a daily basis, let alone minute by minute, as some day traders do. And guess what – that’s okay! I still make money in the stock market and so can you.

If you dread the fact of holding stocks over long periods of time and seeing a stock in your portfolio over a week or even overnight scares you to death – that’s okay! You can still make money in the stock market.

If we can understand ourselves, we then have the ability to tailor an investing program that fits our differing lifestyles and personalities.

In Summary

  • Understand if your personality and risk tolerance are more appropriate for long-term investing or shorter term trading.
  • Use only investing strategies that make sense to you. (If you don’t really understand them, then you’re not going to make money)
  • Develop many points of reference  and pieces of data to  ensure you feel comfortable with your investment decision
  • Combine the strategies that you understand into your own system.

Once you have a profitable system that you feel comfortable with, continue to review strategies that may allow you to add another point of reference to your toolbox.  However, I always abide by the rule “if it’s not broke, don’t fix it!”

I hope this helps you in developing your own investment strategy and I’d love to hear how you have developed your current investing process.  Feel free to contact me or drop a comment below!



  1. Tyler,

    I like this very thought out article. I too have used charts, indicators, sentiment, fundamentals and at the end I process market information differently than the average joe :-). Of course if you watch too many strategies at once, you become hesitant and fail to pull the trigger. That’s why you have to keep it simple. Just remember that a simple buy and hold of S&P 500 outperforms a huge majority of market participants.

  2. I agree that one can combine some nugget or two from many different styles. I’m a buy-and-hold, dividend growth, long-term investor (mostly). But I also recently (January?) read O’Neill’s book, and I remember faintly feeling clued in about what he had to say about watching volume levels develop. From what I’ve learned since, he has a good point also about placing 5% stops on your trades. So, perhaps O’Neill’s book is worth looking at again to remind myself of these points.

    But it might be true that some styles just make more sense to some than others do. And there’s diversity even within a broad style category, such as investing for dividends: do you reinvest them for the long term, or take them in cash as you go?

    I don’t think I’ve completely developed My Strategy yet, but I’m growing more confident about it, even as I make some contrarian moves.

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