03/21/2012 12:57 pm ET Updated Dec 06, 2017

Think 'Score Gains,' Not 'Stop Losses'

One of the most common questions I get asked by investors is, "Should I set stop losses to limit my losses?"

My answer? "Why not set stop gains to capture gains instead?"

Click to see a chart of the Dow Jones Industrial Average over the last year on As you can easily see, over the last year (and years) Wall Street has been a rollercoaster, with as many ups as downs. If you set stop losses, you are losing every time the market pulls back, which is often. This is a losing formula. If you set capture gains, you are winning every time the market rises, which is just as often as the pullbacks! This is a winning formula.

When volatility is the name of the game (like it is in today's market), it is very important to use winning tools, strategies and mindsets.

I am constantly getting investors to think like "winners" instead of "losers." If the first thing you think about is losing, then the first thing you really need to work on is changing your mindset. Stocks and bonds have been around for centuries, and in fact score more than twice the gains of gold and real estate over a 30-year period. Be sure you aren't getting your money mindset from someone who profits on your fear... (Lots of home mortgages and HELOCs were sold in 2005-2008 by mortgage brokers who earned commission and wanted to line their own pockets, without any consideration as to how it negatively impacted the lives of their clients.)


You'll never score a goal if you aren't charging for the end zone. If you are consumed with Apocalyptic visions every time the quarterback steps back a few feet in negative territory before throwing the touchdown pass, you won't be running to your mark to catch it.

So, how do you activate Score Gains Thinking?
Below are five easy steps to winning in your investments.

1. Pick a Winning Team
2. Employ a Winning Game Plan
3. Be a Patient Buyer
4. Capture Your Gains Early and Often
5. Limit Orders: The Key to Profitability in Volatile Markets.

And here are the details...

1. Pick a Winning Team.
A big component of a winning team is making sure that you have the right athletes on the field. You don't want your kicker playing linebacker, or your quarterback on defense. The winning strategy for your nest egg is different than it is for Stocks on Steroids. Stocks on Steroids (individual stocks) are not "money while you sleep." They require babysitting. Conversely, some of the large cap funds you want to purchase for stability in your nest egg would be a bad investment if you are looking to maximize short-term gains. Knowing your Jabba the Huts (that stabilize your portfolio) from your Hares (that can score quick gains) allows you to know which funds to buy for marathon performance and which companies are more likely to win in the short run.

2. Employ a Winning Game Plan
A great nest egg strategy includes the following: 1. Keeping a percentage equal to your age safe. 2. Knowing what is safe. 3. Diversifying your "at risk" assets by size and style. 4. Adding in hot industries. 5. Avoiding the bailouts. 6. Rebalancing 1-3 times a year -- preferably using limit orders. For Stocks on Steroids strategies, read the chapters, "The 3-Ingredient Recipe for Cooking Up Profits," "Hitch Your Wagon to a Star" and "Stock Report Cards," from You Vs. Wall Street. To learn and implement nest egg strategies that have worked fantastically through bull and bear markets for more than a decade, consider attending my next Investor Educational Retreat. Call 310-430-2397 to learn more now.

3. Be a Patient Buyer

Picking a great company or fund is the second step in the 3-Ingredient Recipe for Cooking Up Profits. (The first is getting more financial literacy, money knowledge and wisdom.) It is just as important to follow the third step -- "never pay retail." Be sure to buy your stocks and funds at a good price. At minimum, check out the 52-week high and low. Other considerations include seasonal and annual trends, price to earnings ratio and earnings growth. Read, "The Santa Rally and Other Wall Street Secrets" from You Vs. Wall Street to learn more.

4. Capture Your Gains Early and Often

As you've seen in the chart above, the markets are very volatile. Today's profit is tomorrow's loss. A shot fired in Greece or Syria makes the markets tremble in North America. Even great companies, with long-term potential, have very large swings in their 52-week highs and lows simply because the market itself has been on a rollercoaster ride. So, re-balance your nest egg at least once a year and adopt a strategy of taking your "Stocks on Steroids" profits early and often.

5. Limit Orders: The Key to Profitability in Volatile Markets.

One of the best ways to ensure that you are buying low and selling high is to employ limit orders. When you are evaluating a fund or company you wish to own, be clear about the price you wish to buy it at and the profits you are hoping to see. Use limit orders, and you are released from the burden of watching the markets incessantly to hit the prices you desire! You can apply this to the re-balancing of your nest egg and to your Stocks on Steroids purchases, too. If you don't know how to do this, this is one of the best strategies that we teach in the Natalie Pace Investor Educational Retreats. Join us!

You can learn more about how to analyze the fiscal health of your investments in my book, You Vs. Wall Street. Therein I outline in detail the easy-to-understand and implement strategies that earned me a reputation as a #1 stock picker. You can also see a sample nest egg diversification strategy that outlines how to keep enough "safe," and how to diversify your holdings for maximum protection and performance.

Image courtesy of Morningstar/

About Natalie Pace:
Natalie Pace is the author of You Vs. Wall Street and Put Your Money Where Your Heart Is. She is the founder and CEO of the Women's Investment Network, LLC (a global financial news, information and education site), where she has been adding a splash of green to Wall Street and transforming lives on Main Street for more than a decade. She is a blogger on and a repeat guest on national television and radio shows such as Good Morning America, Fox News, CNBC, ABC-TV,, NPR and more. As a strong believer in giving back, she has been instrumental in raising tens of millions for public schools, financial literacy, the arts and underserved women and girls worldwide. Follow her on For more information please visit