Building Your Investment Strategy to Meet Your Goals

Establishing an investment strategy that compliments your personality and meets your goals is relatively easy once you determine whether you want a conservative, aggressive, or a moderate investment strategy.

To get started building your investment strategy to meet your goals, you have to take two primary actions:

First, define your personality and establish goals:

  • What kind of risks are you willing to accept: A few losses are unavoidable; but do you want to keep losses to a minimum at the expense of losing out on potentially large gains that might result in higher losses?


  • How often do you want to trade? Are you willing to trade each week, or would you prefer to work with your portfolio once or twice a month? Or even less?


  • Are you willing to let your portfolio, your retirement account, or your wealth account build very gradually over time? Or do you want your accounts to grow at a faster pace?

Second, you need to understand the strategy ingredients that make up conservative vs. moderate vs. aggressive investments:

  • Frequent trading, almost daily, is best suited for aggressive and possibly, in some cases, moderate investments.
  • Setting sell stops that are low, like 1% to 3% will result in more frequent trading than sell stops that are set a bit higher.
  • Trading a wide range of stocks versus ETFs or many mutual funds will generally produce more aggressive or moderate investment strategies.

Here is how setting different rules or parameters in your retirement or personal investment software can affect your results and define your investment strategy as conservative, moderate, or aggressive:

Strategy Elements

  1. Ranking – setting sell rules based on the rank of a position (ticker symbol) in your group of potential positions. Ranking in the top 5% or 10% vs. the top 30% will produce more frequent trading and normally a more aggressive strategy.
  2. Stops – setting the sell rules based on how much a positions drops from its highest point can also result in trading frequency or portfolio churning.
  3. Hold Rules – defining your strategy by saying you prefer to hold positions for no less that 10 days vs. 30 days or 60 days sets your strategy at aggressive vs. conservative.
  4. Market Exit Signals – employing a market exit signal based on the equity curve of the performance of the stock markets can tell you when to pause or even cash out of the markets for a short or extended period of time; doing this will preserve your money from losses. But setting this market exit signal with a short evaluation period vs. a long period can have a very different major impact – a period that is too long is bad because you won’t get a market exit signal in time to avert major losses. Conversely, if the period is too short you will find yourself trading too frequently.
  5. Period of Analysis – when you are analyzing your group of potential mutual funds, ETFs, or stocks, the time period selected will also determine the type of investment strategy you’ll be using. Longer analysis periods will result in more conservative approaches while short periods, like 10 days, will be more aggressive and require more trading.

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Don’t let all of these factors intimidate you. The key to profitable safe investing or defining your investment strategy, is to understand that YOU are in control and that YOU set the parameters to compliment YOUR personality and meet YOUR objectives.

And yes, you should back test using your personal investment software to find the exact settings that meet your needs and reflect on your desires, and you can tailor the analysis testing to fall within a conservative, moderate, or aggressive range to build your investment strategy to meet your goals.

Dominick is the designer of the investment program Dynamic Investor Pro, an investment software used by individual investors and professional investment advisors for stocks, ETFs or mutual funds. 

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