09/24/2015 04:52 pm ET Updated Dec 06, 2017

Five Ways to Beat Others in the Stock Market


The stock market is a difficult and often competitive game, and one that can come with its fair share of letdowns. Approximately 90% of traders will lose money; 70% or more of mutual fund managers fail to beat the S&P 500 each year. These are some pretty hard statistics to swallow, but the good news is that you can do better than these stats and you can beat others in the stock market like these stock traders here and here have done. All you have to do is pay close attention to these proven tips.

1. Cut Losses Quickly When You're Wrong

There will be times when you make poor decisions in the stock market. It happens to everyone no matter how much or how little experience they have. When you do make bad decisions, you need to cut your losses quickly. You don't need to stay fully or even partially in these investments. As a trader you can move in and out of investments easily, so don't feel like you need to stay stuck with a bad investment. If it is not working, get out.

2. Don't Trust Analysts

Don't rely heavily on management or analysts from Wall Street. Do your own research, look into the investments, monitor trends and educate yourself; this is the best way to make the smart decisions that no one is making. The 90% of people that are losing money in the stock market are all looking to these same entities for advice and all getting the same poor results. Be different, put in the legwork and you will start to pull ahead.

3. Remember, Track Record Matters Most

As you look into different companies and plan to invest, one important thing to keep in mind is that the track record matters most. Learn from and follow people that have a proven track record and who have been profiting for years in the market. These are the individuals that you want to follow. Look to what these people are doing right as they have the documented proof to show you first hand that they know what they are doing.

4. Stocks Can Be Priced Longer Than You Can Stay Solvent

This is one thing that so many people forget. Stocks can be priced almost irrationally longer than the average person can stay solvent. Remember: the market is always right, humans are typically wrong, and make sure that you obey price action. Don't think that you are bigger than the market. If you adopt this mindset then you are positioning yourself to find far more success than the average trader.

5. Find a Strategy That Works For You

You need to find a strategy that is comfortable for you. I don't like to wait much, which is why I day trade. However, this is not the only way to do things. If you are busy with school and work and can't be trading daily, then consider swing trading or long-term investing. It is not the strategy per say that is important, but rather your consistency with that strategy. You need to do what works best for your lifestyle, your personality and your goals.

Keep these tips in mind when you are looking to earn some serious gains in the stock market and you will be on your way to beating the odds and beating others with your trading efforts.