These are absolutely trying times for independent investors. When even institutional investors are struggling, independent individual investors cannot be sitting pretty watching markets gyrate in this fashion.

But, the good news is that independent individual investors can be a lot nimbler than institutions when it comes to dealing with their portfolios. After all, they are managing only their own money.

In general, here are a few important guidelines that can help any independent individual investor in navigating these turbulent markets.

Frankly Assesss Your Risk Profile

The markets are providing a great opportunity for individual investors to determine how risk averse they really are. We find ETFs going up or down easily 5 to 6% in a day. The seeemingly strongest ETFs are down over 31% in the last 3 months. Are you comfortable with this kind of movement? If not, you must prudently act now and watch the market from the sidelines.

Check Your Portfolio's Composition

If you still want to be in this volatility game, this is the best time to seriously look at your portfolio's composition. Is your portfolio looking too aggressive with ETFs from emerging markets, high flying sectors. Act now to make the corrections and try to build a little bit of diversification. Over diversifying can also lead to underperformance.

Invest with Money That You Can Afford To Lose

This may sound like a very negative outlook but turbulent markets are merciless. If you are an active investor you must be prepared to be whipsawed if your assessment of the markets go wrong and there is always a possibility of losing some or all your invested money. If you want to be part of the action during turbulent markets such as this, you should also be prepared to part with money and not feel too uneasy about it. Money that you need for emergencies, savings and other capital outlays should not be committed to these kinds of markets.

Determine the Maximum Loss You Will Take in One Position

If you are comfortable with the amount of loss that you can take in any single position, chances are your stress levels in holding on to that position will diminish considerably. Once you set that stop loss limit, you need a strong sense of determination to honor that. Mechanical Stop Losses are unemotional but chances of getting whipsawed do exist. Your skill in getting out of a position at a proper threshold is the most important part of the investing business that you will need to practice if you want to be an independent investor. This is probably one of the hardest skills to learn.

Establish Your Investing Style - Growth or Value

This is the most important determination an independent investor will need to make. What kind of investing style you will be adopting consistently. Growth Investing focuses on currently strong investments while Value Investing focuses on currently unattractive investments. Shifting between styles can be disastrous to say the least. To be sure, you can follow both styles but not on the same investment.

Buy Into Weakness and Sell Into Strength Instead of Chasing Momentum

Both Growth and Value Investing Styles can be profitable only when you are able to buy low and sell high. Growth Investors tend to get into strong stocks when they are consolidating. Value Investors tend to get into weak stocks when they have fallen sharply. Research is the key here. It can be technical or fundamental but it must be specific and carefully undertaken.

Give Time for Your Investment to Work

After you have entered a position give it some time to work if you are convinced that it is a good investment you have made after your research. The key is not to get swayed by intra-day or intra-week volatility while making a sell decision. Needless to say, this kind of volatility has to be used to your advantage to buy on weakness or sell on strength.

Assess Your Portfolio's Risk Periodically

As an independent investor you have nobody to do risk analysis on your portfolio than you. You are the money manager of your portfolio and you have to do your due diligence. Spread your investments across different non-correlating sectors, asset classes and periodically assess how these asset classes are ranking from risk perspective. If you don't know how to assess your portfolio's risk, we strongly suggest that you learn it first before managing your own money. This is an essential skill for every independent investor.

Determine Ahead of Time The Benchmark You Will Be Tracking

You will need to establish a tracking benchmark for your portfolio and make sure that your portfolio's performance is tracking your benchmark periodically. The most typical benchmark US investors use is the S&P 500. If you are able to convincingly out perform this broad index year over year, you can certainly say you are one of the best independent investors. Committing to this kind of tracking will make you be a disciplined investor and get you be more engaged with your portfolio.

Good Luck with your Investing!