IBOV after presidential elections

As I expected IBOV opened on Monday with a big gap, went down almost -7%, and closed at -3%.

On Thursday and Friday IBOV had a big recovery due to an euphoria in Japanese and US markets, which are breaking their own records, and resulted in more people buying stocks in all markets, including Brazil.

IBOV is still far away from its record (in 2008, before the crisis, achieved 74,000 points) and currently it is around 55,000. While many countries already passed their records, Brazil still has a long way to achieve 74,000 again.

I analyzed many stocks this week and there are good opportunities with more than 70% of chance of achieving profit. There is only one BIG problem: The size of the Stop Loss.

I choose my investments based on the probability of achieving profit and based on the maximum loss that I can have (Stop Loss). Due to the big volatility that has happened in IBOV in the last weeks, all stocks I would invest have a Stop Loss higher than 10%.

Since there is always a probability of loss (around 30%) in these methodologies and the Stop Loss is 10%, the amount of money that we can invest is low and the risk is high.

I prefer to wait 1 more week and do more conservative trades. Remember, your goal is not to get rich in 1 month or 1 trade (this doesn't happen). Your goal is to get more and more money every trade with discipline and get rich in long-term. I've seen many people that say that earned 10% in one day, but believe me, this people take many more risks than us, and believe me, they will not tell you when they lose 10% in one day...

To conclude, let's wait one more week and let's earn money without having too many risks.

Have a great week.

Leo.