Investment Risk Redefined: The Free Trade Report - Thisinvestment riskinsight comes from our Chief Investment Strategist, Keith Fitz-Gerald:

There's no such thing as a 100% risk-free investment . If anyone tells you otherwise, take your money elsewhere.

That said, you can make any investment risk "free" under the right conditions by using one of my favorite tactics: the free trade.

This strategy lets you do three things at once: capture profits of at least 100%, pay for your initial investment, and reduce the risk on your remaining position to almost nothing.

Before I tell you how it works, let's look at how Wall Street misleads investors about how risk works...

The Myth of the "Risk-Free" Investment

The best advisors will help you pick investments that will help
you meet your individual goals in your time frame, regardless of
whether it's an up or down market.

The term "risk-free investment" is still in widespread use today. This is despite the fact that the idea of risking nothing and gaining everything has never ended well.

The reason is that Wall Street only associates risk with loss.

That's why they consider U.S. Treasuries and other government paper as "risk-free" choices, even though they know there are risks inherent in every investment. It's a game of semantics.

It's a game they want you to play, because it forces you to implicitly buy off on the most profitable strategy of all (for them) - diversification.

That's the idea that if you spread your risk around in different asset classes and investments -stocks, bonds, real estate, etc. - you'll be better off because not everything can possibly go down at once.

But it's absolutely wrong.

Ask anybody who got their portfolio halved twice in the last 15 years - first during the dot-bomb meltdown from 2000-2003 and then during the Financial Crisis that started in 2008. Everything went down at once both times.

You have to think about investment risk differently in today's highly computerized and interlinked global markets, especially when it comes to your winners.

Here's what I mean...

How to Make Any Investment Risk "Free"

Put simply, nobody ever went broke taking profits. Plenty of people have gone broke taking losses, though. So it makes sense to not only concentrate your assets using appropriate risk management, but also to harvest your winners when the markets are strong.

Whether you've got a lot of money or a little, the principles are the same. First, you want to capture profits every chance you get. Second, you want to lower risk at every opportunity.

That's exactly how the "free trade" works.

Once an investment delivers at least 100% returns, sell half your position to capture profits . Then put those profits to work in other investments, and let the remaining shares of the first investment run.

In doing so, you get back your original investment, and you maintain all the upside you can handle, essentially "for free."

Even better, since you've now "paid" for your investment, you can stay in the game and not risk another dollar, even if the stock you just harvested later has a reversal in fortune.

A free trade works in all market conditions, on any investment, and can be set up well in advance. No other technique I know of comes close in terms of simplicity or effectiveness.

Trillions of Dollars Are Backing These Trends...Six "Unstoppable Trends" have created more billionaires than any other trend in recorded history. Investing in companies that tap into them will pay off huge. To start making money on these trends today,find out how to spot them here...

To get full access to all Money Morning content including our latest Premium Report, "How to Make 2015 Your Wealthiest Year Ever," click here

About Money Morning: Money Morning gives you access to a team of ten market experts with more than 250 years of combined investing experience - for free . Our experts - who have appeared on FOXBusiness, CNBC, NPR, and BloombergTV - deliver daily investing tips and stock picks, provide analysis with actions to take, and answer your biggest market questions. Our goal is to help our millions of e-newsletter subscribers and visitors become smarter, more confident investors.

Disclaimer: © 2015 Money Morning and Money Map Press. All Rights Reserved. Protected by copyright of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including the world wide web), of content from this webpage, in whole or in part, is strictly prohibited without the express written permission of Money Morning. 16 W. Madison St. Baltimore, MD, 21201.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Other Topics

How to Invest

Latest Markets Videos