It’s our pleasure to share with our social trading 101 readers an interview that we have conducted with one of eToro’s most popular investors Ana Sarda Rodrigues.
Ana has more than 12,000 followers, 1,400 copiers, and one million dollars in AUM (assets under management)!. The link to her profile is available at the end of the article, you can choose to copy automatically her trades via eToro.
From an investment perspective, I use both fundamentals and technical analysis to make decisions. These two complement each other very well: you can use fundamentals to determine the “what” and “why,” while looking at technical factors to determine the “when.” This approach also helps clear your mind and detach yourself from emotions.
From the fundamental perspective, it starts from the top down. I like to research megatrends and think outside the box to figure out which companies could potentially benefit from these future trends. Currently, these trends include everything from the shared economy to space travel. It is important that no news, opinions, or reviews are included in this part of the research. In fact, I even have an “allergy” to Wall Street Securities Analysts and stay away from them as much as possible.
When you become more experienced in the investment field, you realize how to use your instincts for long term positions. This means I am often biased and dedicate a part of my portfolio to companies and products I love and have been directly impacted by their amazing customer experience (Apple, Starbucks, Tesla). I still remember the first time I drove a Tesla, and that experience completely changed my perception of the whole company.
Afterward that part of the research, I move a bit deeper into some basics on how the market perceives a certain stock (price-to-earnings, short interest rate) and internal strength (forensic accounting). Finally, I review the chart and identify at which discounted levels or pullbacks I would like to buy for the long term, building my positions slowly.
For short-term holdings, I like to be opportunist and hear what street analysts are saying. Often, for short term moves, it is not logic that moves the market but sentiment. If you can early identify hype sectors and growth stocks, you can achieve phenomenal gains with a controlled risk-reward.
After I found potential sectors, I objectively look at all relevant stocks related to that section of the market: chart price action, structure and overall market sentiment. It always must fit 3 criteria:
- Favorable location and price structure (lower high for short positions, and higher low for long positions for example)
- Buy/Short candle signal
- Favorable Risk-reward ratio (> 2:1)
My copiers sometimes complain I am too slow with trades, but I never lose money by waiting for high quality setups.
Both. Let me explain.
Most of my portfolio is long-term, with essentially a combination of value and growth stocks and occasional rebalancing. This includes value and cyclical stocks that pay dividends, so that I still see some return even when the broader markets face a correction or move sideways. When markets see more bullish action (as we had in 2020), I like to focus on growth. This is primarily because times like this are when you can double down on the short term.
I also have store-of-value assets (e.g. metal stocks and crypto long holdings) using the same research logic. However, I am much more conservative with Alts due to their similarities to the dot.com bubble, and we all know how that ended. Only a few companies thrive in the end and become sustainable tech companies.
Finally, 10-20% of my portfolio is made of swing trades/short term holdings (forex, stocks, cryptos). I also keep at least 10% in cash to profit from opportunities when they come along.
Every crisis is different. How I approach a fundamental change, such as the collapse of our current financial structures, differs from my approach to a transition phase, such as the pandemic and its associated lockdowns.
The first step is to assess the potential damage. Let’s consider a market crash with a 30% devaluation. Typically, a market crash is not caused by a single event as most traders think; instead, it’s a process that unfolds during weeks and sometimes even months. This means you usually have enough time to rebalance the portfolio towards cyclical and high dividend stocks, which often experience milder corrections and are safe resorts for institutional investors.
Metal stocks and other stores of value like Bitcoin are good complementary options. Eventually, shorting Indexes (and individual stocks in extreme cases) can also protect the portfolio against short-term damage and hedge some losses to avoid margin calls.
Keeping at least 30% in cash is also important for when the markets resume a bullish trend. Though we might experience sideways actions even for a couple of years (difficult to imagine with the gains in today’s markets!), in the very long term, markets always go up.
I always focus on risk-adjusted returns and see them as absolutely crucial for capital preservation. I like to say that it’s easy to obtain profits in a bullish market, but it is much harder to keep them when the bears show up.
Bitcoin is a must in every portfolio. I´ve been investing since it hit $1000, but it’s still NOT too late to jump in for the long term. To be honest, I am doing DCA with BTC every month when it is below 60K, as part of my regular savings plan.
We are currently witnessing a major redefinition of what “money” represents, and BTC plays a crucial role in this transformation. Major institutions are already adopting this store of value and soon Governments will also start acquiring capital reserves. The more governments print money to acquire BTC in the new “golden race,” the more the price in relationship to the dollar will appreciate.
Bitcoin has many advantages in relation with other stores of value like gold, so it’s a fundamental play. For everyone interested in the topic there is a very good book called “The Bitcoin Standard” (Saifedean Ammous).
The altcoin mania taught many newcomers and pajama traders (like me) the dark side of the financial markets and human greed. I ended up with not one but several costly mistakes. However, this was the push I needed to start learning the psychology behind trading, which is truly fascinating!
My main take-way from the experience was to have patience. It will not be one trade or crypto that makes you a millionaire. You will not get rich overnight; it will take several years of discipline, learning from mistakes, and a pinch of skepticism to build wealth.
1. Don’t jump into trades or investments just to follow the herd. Only engage in setups with a solid plan and stick to it; let markets do the heavy lifting for you.
2. Have patience and resilience. Keep investments as part of your savings plan and invest religiously every month. Dollar Cost Average (DCA) is a very good strategy for beginners, especially if you are investing in volatile assets such as BTC, growth stocks in hyped sectors like cannabis, e-commerce, cloud business, or electric vehicles.
3. If you’re new to trading, start by learning about support and resistance levels, fibonacci retracements, and extensions for technical analysis. Focus on growth and value measures if you prefer fundamentals and think outside the box. Focus not on what you are seeing now, but what you believe the world will look like in 5-10 years. Understanding the psychology behind trading is critical for anyone who wants to survive more than 2 years (the average survival rate of retail day traders).
Technical Analysis (J Murphy) and Trading in the Zone (Mark Douglas).
The former gives you everything you need to be able to perform a basic technical analysis. This is sufficient for 90% of the swing trades you’ll make. Beyond that, there is no need to overwhelm yourself with other indicators that often just restate the obvious.
The latter is entirely focused on trading biases and psychology, something you need to master not only to read the markets, but also to build your confidence and strengthen your emotional resilience.
He’s a bit controversial and sometimes too extreme, but I like how Max Keiser thinks. He helps me see the future.
Overall, Joel Greenblatt is probably my favorite investor, as he focuses on great companies trading at bargain prices. You can even post investment ideas on his website (www.valueinvestorsclub.com) and compete with others for a monthly prize. I also get several investment ideas for value stocks from him. He has a lot of crafted, hidden knowledge!
It’s amazing to experience how your message can come across the globe and influence millions of retail traders. Platforms like this give everyone a fair chance to thrive as an investor based solely on performance, not on titles, gender, or nationality.
On the other side, I learn a lot from my investors. They always ask clever questions, so it helps to understand and analyse the rationale behind every trade. It also drives me to stay sharp and research certain sectors I would usually ignore.
You can copy my trades automatically on eToro: @nintingale