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    Default Investment Strategies - A must read for beginners

    Baby Money Maker

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    Investment Strategies

    Most failures in investing are caused by the lack of a well-defined strategy. In order to
    succeed the investor has to have an investing strategy that is consistently adhered to. But
    choosing the right strategy is not everything. The most difficult part is controlling your
    emotions. Most people are unable to stick to their investing plan when confronted with a
    loss or an opportunity of a higher potential profit. Emotions come into action at such
    moments, causing the investors to depart from their strategies, which ultimately leads to
    a failure.

    Have you ever wondered why professional stockbrokers are not the richest people in the
    world? They certainly do know how to invest money, and they do it every day on behalf
    of their customers. The trick is that they work with somebody else's money. If they were
    to invest their own funds, most of them would - as a result of stress - make costly

    Therefore before making any investments it is most important to adopt some strategy
    that will be followed closely and will not be abandoned under any circumstances.
    People adopt different strategies depending on how they are disposed towards taking
    risk. I will describe two diametrically different strategies - a conservative and an
    aggressive one, on the example of HYIPs and stocks.

    In my description of the strategies I will use the term "investment unit". This is the
    minimal amount of money that the investor is inclined to allot for a single investment.
    Let's say that someone has $100 and adopts $5 as the investment unit. Then this person
    has 20 investment units at his/her disposal.

    Conservative strategy: High-risk investments

    The conservative strategy yields a potentially smaller profit, but requires less funds
    (fewer investment units). I will give a detailed scheme using as an example programs
    that are based on contracts (as it is in the case of, for example, sport betting based

    • pick several candidate programs and for each of them calculate the ratio of
    winning to losing contracts (win/loss ratio);
    • from these programs choose one that has the best win/loss ratio;
    • invest everyday THE SAME AMOUNT (investment unit);

    Your potential loss is limited to the sum of consecutive lost contracts. Every HYIP that
    has a win/loss ratio greater than 51% will bring in a profit after some time. The profit is
    of course substantially smaller than it could be if the investment was progressively
    increased every day, but such strategy minimizes the potential loss and is a convenient
    option for investors with limited e-gold funds as well as for beginners.

    For most of the presented programs it is possible to use this method at profit, but you
    should always make your own analysis and choose programs with the win/loss ratio well
    above 51%, preferably above 60% (in long term).

    Often a program exhibits a very high win/loss ratio over a short period. But remember
    that in your plans you also have to consider the win/loss ratio calculated over a period of
    at least several months. Use both: the short term win/loss ratio (say, computed over a
    period of 7-14 days) and the long term ratio (2 months or longer).

    This strategy should be applied as long-term strategy (several months). In one of the
    programs such strategy yielded a return of 220%.

    Conservative strategy: stock exchange

    In the case of stock exchange the conservative strategy consists in diversifying into
    various securities. This is how you should divide your capital according to this method:
    • 20% - treasury bills;
    • 20% - treasury notes;
    • 20% - stock companies with the highest current growth dynamics;
    • 20% - cash kept in a bank;
    • 20% - gold.

    Aggressive strategy: High-risk investments

    Aggressive strategy is a combination of carefully selected investment opportunities and
    tested investing techniques. Only strict adherence to the rules of aggressive investing
    enables you to make profit. So the most important principle is: stick to the rules.
    You need to:

    • have an e-gold account;
    • have some funds deposited in this account;
    • know how to use your e-gold account;
    • read carefully this publication;
    • consistently follow the guidelines.

    The whole idea is based on proper allocation of funds and on repetitive investing. The
    first thing you have to do is decide how much of your funds you want to devote for
    investing according to this strategy. You should remember about general principles that
    apply to HYIPs, especially the rule saying that you should never invest more that you
    are prepared to lose in the worst case.

    An amount of $300 seems to be the minimal amount to start with using the aggressive
    strategy. In most of the programs that I describe here, the minimal investment is about

    $10-$20, so I suggest to divide the funds into units of $10.

    Principle 1. Invest in the so called Daily Players - programs that deal with different
    forms of betting. They place bets either every day or a few times per week. Of course
    NOT ALL contracts bring in a profit. The trick is to invest in programs run by
    experienced traders who have proved that the win/loss ratio for their programs is 60% or
    higher (which means substantially more wins than losses). Below you will find a few
    programs that have a promising result record. Don't get fooled by sites that claim to
    have a profitability over 90%. This is practically impossible.

    Principle 2. When you start, each time invest one investment unit.

    Principle 3. If you win, you should again invest just one investment unit, keeping the
    profit. Usually the offered profit from a won contract ranges from 50% to 75%, which
    means that for a $10 investment unit the profit will be $5-$7.5. For example, if you
    invest $10 and the profit is 75%, you get back what you invested ($10) plus the profit
    ($7.5). So you should keep $7.5 as profit, and reinvest $10 in the next cycle.
    Principle 4. In case of loss you invest the next day (or in the next investing cycle) TWO
    investment units. If you win, you should proceed further according to Principle 3. If you
    lose again, increase the invested amount to FOUR investment units (or even more,
    you have to invest enough to make up for the losses in previous cycles). If you lose
    again, you have to invest even more investment units, so that the ultimate win will give
    you more than all previous losses.

    key to success is participating in programs run by experienced traders, where the
    win/loss ratio are much greater then 55% (preferably 60-65%). If the program divides
    the funds into two or three parts, you should reinvest only this part that was lost.
    This procedure guarantees profits. The only problem that can occur is the lack of funds
    to keep on investing in case of several consecutive losses. Therefore it is very important
    to adopt a suitable investment unit for your overall capital that will ensure that you can
    handle several losses in a row. If you don't run out of funds, your profit is guaranteed!


    You should plan carefully the amount of your investment unit carefully, BEFORE starting to invest!
    The investment unit should be chosen in a way that allows you to double the investment in
    consecutive cycles without running out of funds.

    Not all HYIPs have the same rules. But the principle of increasing your investment after each loss
    applies always. Our experience says that if your portfolio is chosen properly, 3 or 4 consecutive
    losses happen seldom.

    Principle 5. Diversify. Don't forget that you are dealing with high risk programs and
    there is no warranty that a program will function forever. However, the profitability for
    the organizers of the program is so high (25% and they don't invest their money) that it
    doesn't pay off for them to cheat. It is a good idea to allocate your funds in several
    programs and apply your strategy to each of them separately. This way you can still be
    at profit even if one of the programs at a given time is at loss. But this can be done only
    if you have enough funds. In the beginning start with just one program, and when you
    have gathered more funds, then start diversifying.

    Principle 6. When you acquire the assumed capital (for example $1000) you can start to
    reinvest only the profit. Withdraw your initial investment and use only the funds that
    you earned. To maximize the profits you can then allow yourself to invest daily in a
    given program for 10 to 15 days. This will give you a significant increase of your capital
    after about 4 weeks, regardless if there was a loss or win on a given day.
    Most common mistakes:

    1. Too large investment unit. Remember that you have to be able to invest two
    investment units in case of a loss, and if a second loss occurs, you have to be
    able to invest four investment units, and so on. Therefore you should carefully
    choose your investment unit so that you don't run out of money before you make
    profit. Personally I divide my funds in such a way that enables me to increase my
    investments 8 times in a row. It makes me feel safe, because I have never
    encountered more then 6 losses in a row in the presented programs (although it
    cannot be excluded that such a series will occur someday). You should be able to
    increase your investment for at least 6 times.

    2. Jumping from one program to another. This is a straight way to constant losses.
    Some people start investing in one program, and then, after the first setback, they
    rashly switch to another one. Such operation must result in losses!

    3. Diversifying when you don't have enough funds. Investing in more than one
    program is practically possible only when you have enough funds on your e-gold
    account. To invest safely in two programs you need at least 16 investing units.

    4. Immediate consumption of profits. Some investors decide to withdraw funds
    from their investment portfolios after the very first successes. This implies
    starting everything from the beginning (the same amounts). By reinvesting your
    profit you can significantly increase your capital, and you should do it by
    increasing your investment unit, for example from $10 to $20. Remember to
    choose your investment unit in such a way that you will have enough funds for
    six consecutive increasing investments.
    Last edited by mattdoucet; 20-12-2006 at 06:23 PM.
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