Have you noticed that more and more people seem interested in investing and trading these last few years? Well, that’s because there are fewer and fewer barriers to trading. Apps like Robinhood have made the markets accessible to anyone with a smartphone and a few dollars. This is exciting for a lot of us, but trading can have risks, so it’s important to be aware of them.
When I went to college, Robinhood was just gaining traction. I hadn’t heard much about it until I had a conversation with a friend of mine. He told me that he had lost around $500 (not a ton, but pretty decent for a college freshman). Not only that, the $500 was his entire investment. When I asked what had happened, he revealed that he had invested in what he called “shady Chinese tech stocks” and, guess what…they plummeted.
My friend’s anecdote may seem more funny than tragic, but it’s a good reminder of what can go wrong when you start trading. Rookie investors who aren’t used to managing a portfolio may not know when they should exit their trades (aka sell their stocks if that's what's being traded). Should you wait for a stock that is down to rally? How about a crypto on a run? Do you cash out now, or wait to see if there are even more profits? And what about distractions? Newer investors may not check on their accounts and leave their money invested. But with no exit strategy in mind, their portfolio’s value could collapse. That’s especially true if you are focused on cryptos.
Because of these risks, traders might want to incorporate what are known as “take profits” and “stop losses.” These are threshold settings or triggers that direct the account to exit the trade, either because the asset’s value is up so you can capture profits, or because the asset is down so you can cut your losses. The good news is that these thresholds can be automated so that trades are closed as soon as the thresholds are reached. Getting back to my friend whose “shady stocks” tanked - if he had set stop losses on his Robinhood portfolio, he would have kept most of the $500 he had invested.
With QuantFu, you can customize an automated robot (what we call a QBot) to watch your Robinhood portfolio. When you sign up for QuantFu, you’ll automatically be prompted to set a take profit and stop loss for individual holdings within your portfolio. Then, your QBot will monitor each of your investments and make sure to close trades when your take profit or stop loss has been hit. This way, you can capture profits, avoid huge slides, and protect the value of your portfolio. Sounds like a pretty good idea to me.
