Wednesday, September 28, 2011

How To Win The Million Dollar Portfolio Challenge: Part 2

Million Dollar Portfolio Challenge
In my last post, I revealed the first two tips you need to know to have a chance at winning the CNBC Million Dollar Portfolio Challenge 2011.
(1) Make high risk trades that have a higher potential gain.
(2) Follow the trend.

Today, I'll teach you another two tips that have helped me propel my portfolio to the 380th rank. I know that the competition is far from over, but I am very excited. You have to understand that before I found, I didn't even know how to invest in the stock market, much less how to follow trading strategies. In a short time, I now have a portfolio that ranks better than 99.93% of beginner, intermediate, and professional stock market traders alike. As I said, it's still very early in the competition, but seeing the strategies I've learned working as intended is just a great feeling.

The third tip you need to know is:
(3) Invest in Bullish positions to profit when the market rises, and invest in Bearish positions to profit when the market falls.
For me, this has been the most valuable tip I learned, especially in this highly volatile bearish market we've been trading in recently. The tip is rather obvious, but there are so many limitations in the Million Dollar Portfolio Challenge that it's tricky to find a way to invest in a Bearish position.

Players cannot trade options, nor can they short sell stocks. So in this competition, the only way to profit from a market decline by trading stocks is to invest in ETFs that move with an inverse relationship to the market. It has been very difficult to find some as most of these ETFs are not eligible for trading, but after hours of screening, I've found 5 ticker symbols that move up when the market falls.

Profitable eligible ticker symbols to invest in when the stock market is Bearish:

When the market is Bullish, it's very easy to find winners as many stocks will increase. However, if you're having a tough time choosing individual bullish stocks and want to trade the market movement, then I've found a few great bullish funds as well.

Profitable eligible ticker symbols to invest in when the stock market is Bullish:

If you want a real chance at winning this game, then you have to be able to profit in both bullish and bearish markets. Now you have the tools to do it!

The fourth tip you need to know is:
(4) Manage your portfolio funds according to your game rank.
In the first post I told you that to keep up with the leaders, you would have to make high risk trades on lower priced stocks or funds. I did not explain how much of your portfolio you should risk in these trades. You should manage your funds according to your portfolio rank. If you are far behind the competition leaders, then you should apply a higher percentage of your funds to riskier/higher payoff trades. As you near the leaders, risky trades with large amounts that do not move as you predict can send your portfolio crashing fast. So when you are in the top 1%, you should allocate smaller amounts to the high risk trades. Overall, most of your trades, even in the top 1%, will probably be riskier than you should attempt with real money.

Thank you for reading, and I hope these tips will help you as much as they've helped me so far. There are still many more, so check back to find out more ways to stack the odds in your favor for winning the Million Dollar Portfolio Challenge 2011.

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