The Sensei investor guide

Before you invest.

12 practical lessons. Try the examples with your own numbers.

Examples use pounds (£); the same maths works in other currencies. Account rules and protections depend on your country and provider.

Example portfolio

Used afresh in each lesson. Refresh resets the examples.

Down 50%. You need 100% to get back.

A share does not have to return to the price you paid.

Fall from the starting value

Gain needed to recover100%

Starting portfolio£100,000

After the fall£50,000

Money leftMoney lostBoth bars use the same pounds scale.

Losing £50,000 leaves £50,000 working for you. That smaller amount now has to double to replace the loss.

No new money, fees or tax. The gain needed is not a prediction that it will happen.

“I’ll buy more to lower my average price.”

Buying more puts more of your money at risk.

Your £2,000 holding falls to £1,000. Add another £2,000: you have paid £4,000 for a holding now worth £3,000. Another 50% fall leaves £1,500.

Buying more can be reasonable with new evidence. Lowering the average price on screen is not new evidence.

Keep in mindCheck why you still want to own it. The price you paid does not show what it is worth today.

Research: holding on to losing shares

Research

Investors were more willing to sell shares that had risen than shares that had fallen. Later returns did not justify that pattern.

10,000 US brokerage accounts · 1987–1993

This does not mean every losing share should be sold. The recovery calculator is separate arithmetic.

Odean · 1998 ↗

How fees reduce your savings.

Starting with £100,000, adding £500 a month and assuming 12% yearly growth before fees.

Illustration, not a forecast. Actual returns vary and can be negative.

Money left after 20 years · 12% assumed yearly growth before fees

If your fund charges 0.2% a year

For example, an index fund that tracks a market.

£1,370,295

If your fund charges 1% a year

For example, a fund with a higher annual charge.

£1,187,521

If management costs total 1.5% a year

For example, a service that manages investments for you.

£1,085,942

You put in £220,000 altogether.

Years invested20 years

Change growth, including losses, or monthly savings

Annual growth before fees (%)

Illustrative assumption, not a forecast. Try a lower, zero or negative rate.

Monthly contribution (£)

With 1.5% annual fees, you end up with £284,353 less than with 0.2%, using the same savings and growth. That includes both the extra fees and their effect on later returns.

These are example charges, not quotes. Fund fees may exclude platform charges; a management package may include them. Check the total you pay.

What do these comparisons include?

All three have identical assumed investment growth and end-of-month contributions. Growth and fees compound monthly at the equivalent annual rates. The difference in ending values includes fees and their effect on later returns. No tax, inflation or other costs. Real returns are uneven, not a constant line.

These are cost scenarios, not equivalent products or service quotes. The 0.2% example matches SWDA’s fund expense ratio; platform and other costs may be extra. 1% is an assumed higher fund cost. 1.5% is an assumed managed-service total: real packages may include advice, platform and funds. The three fee rates here are fixed examples. Check your own total costs when comparing services.

Try thisCheck what you pay each year and how that changes the amount left over time.

Why fees matter · guidance

Regulator guidance

Ongoing charges leave less money invested to earn later returns.

SEC investor bulletin · 2025

The amounts shown are calculated examples, not actual fund results.

SEC · fees and expenses ↗

Related sources

SWDA’s published fund expense ratio is 0.20%. This is not an all-in account cost. iShares ↗

Bluecoat publishes a £400,000 managed-service illustration of approximately 1% advice, 0.2% platform and 0.3% funds. That supports the plausibility of a 1.5% scenario, not a quote for your account or a market average. Provider fee example ↗

How much could one company cost you?

The more of your portfolio you put in one company, the more you lose if its shares fall.

How much of your portfolio is in this company?

If this company’s shares fall by

Money lost from your whole portfolio£10,000

That is 10% of the £100,000 you started with.

You have £20,000 in one company. If its shares fall 50%, you lose £10,000. Your portfolio is now worth £90,000, if your other investments do not change in value.

Only this company falls in the example. In real life, several investments can fall together. Costs are excluded; this is not a suggested amount to invest.

Keep in mindCheck what your funds own. Several funds may hold many of the same companies.

Research: the risk of missing the winners

Research

Over the study period, the market’s extra wealth compared with US Treasury bills came from just 4% of companies.

US listed stocks · 1926–2016

Treasury bills are short-term US government debt. This finding does not mean the other 96% of companies lost money.

Bessembinder · 2018 ↗

Related sources

Holding several funds does not necessarily reduce the underlying risk. Diversification can reduce concentration, but cannot prevent market losses. Investor.gov on diversification ↗

Leverage makes a small fall hurt more.

With leverage, a price fall can lose a much larger share of the money in your account.

Linked to your portfolio

Money in this trading account

Edit for a separate account.

Leverage

2× means each £1 of yours controls £2 of investments.

If the investment falls5%

Loss in this example, before any protection£10,000

A 5% price fall loses 10% of the money you started with, before your broker closes the trade or applies any protection.

Total value you are trading£200,000

Money left before costs£90,000

Some accounts limit your loss.

UK-regulated retail CFD accounts have protection against a negative balance. You can still lose all the money in that account. Other leveraged products and accounts may leave you owing more.

Your broker may close the trade earlier. This simple example does not model its closeout rules, interest or fees.

Try thisCheck the protection on your account. A limit applies to the whole protected CFD account, not just one trade’s deposit.

Research: losses among CFD traders

Regulator data

68.42% of Australian retail CFD clients made a net loss after fees.

195,386 clients · financial year 2023–24

CFDs let you trade price changes without owning the investment. This figure is not the loss rate for ordinary share investors.

ASIC Report 828 · 2026 ↗

Related sources

Covered retail CFD accounts have account-level negative-balance protection and margin-closeout rules. Other money and assets held for unrelated purposes are outside that protected account calculation. Professional classification, overseas providers or different products can have different protection. The calculator assumes one long position using the stated account money; it is not a broker liquidation model. FCA rules, COBS 22.5 ↗

You can win 8 out of 10 and still lose money.

Add up how much you made and lost. Winning more often does not always mean making money.

Eight trades make £100 each. Two trades lose £600 each.

These are profits and losses, not the amounts invested.

Take a moment · choose an answer

You won 80% of those trades. Did you make money?

Profit from eight wins£800

Money lost on two trades£1,200

Overall profit or loss−£400

You won more often than you lost, but the two losses cost more than all eight wins made.

Made-up results, before costs. Trade amounts change with your portfolio size; they are not suggested amounts to invest.

“But I only need one 10× winner…”

A made-up outcome, not a success rate

Count every £1,000, including the losses.

Separate example: ten £1,000 investments. This does not change with your portfolio above.

1 winner£10,000£1,000 ends at 10×

9 total losses£0£9,000 disappears

£10,000 put in£10,000 backNo gain before costs

One investment grew tenfold, but the nine losses used up the entire gain. These are chosen outcomes, not the odds of winning.

What if I saved the same £1,000 each year?

Put in £1,000 at the start of each year for 10 years: £10,000 in total.

Those chosen bets, proceeds kept in cash£10,000

A broad index, assuming 5% a year after fees£13,207

Same deposits and end date. Each bet finishes after one year; any proceeds then sit in cash at 0%. The difference reflects both the chosen bets and keeping their proceeds in cash.

The index figure is an illustration, not a forecast. At 0% it would be £10,000; at −5% it would be £7,624. Actual index returns vary and can be negative. No tax or inflation. More winning bets could put the speculative path ahead.

Try thisInclude investments you have not sold, fees and money taken out. Do not count new deposits as profit.

Research: remembering wins

Research

Investors can become more confident when they focus on profitable sales and remember their wins more readily.

Dutch retail data + an experiment · March 2025 paper

The 80% win-rate example is invented. The study does not give a safe win rate.

Gödker, Odean & Smeets ↗

Trying to win back a loss can cost you more.

“Revenge trading” means taking more risk because you want to win back money you lost.

Take a moment · choose an answer

You’ve lost money. You want to make the next trade four times bigger. What helps?

You have already lost £2,000. Now imagine the next trade falls 10%.

How much of your starting portfolio goes into the next trade?20%

£20,000 in the next trade.

Total lost on the two trades£4,000

£2,000 already lost + £2,000 on the next trade.

The earlier loss does not improve the next trade’s chances. Putting more money in means more to lose if it goes wrong.

Chosen losses, not a forecast. The next trade might gain instead. No fees or borrowing; the percentages are examples, not allocation advice.

Try thisAsk: would I take this trade, at this size, if the earlier loss had never happened?

Research: taking more risk after a loss

Research

Professional futures traders took more afternoon risk after losing mornings.

426 CBOT traders · 1998

One historical professional-trading sample. People do not all react to losses in the same way.

Coval & Shumway · 2005 ↗

Don’t let panic make the decision.

Before selling, check whether the investment or your need for the money has changed.

Take a moment · choose an answer

Your long-term fund falls 20%. You don’t need the money soon. What is the best first check?

Your £100,000 falls to £80,000. You sell and keep the cash.

Example 1 · it rebounds

You miss the recovery.

The fund then rises 25%.

If you sold and kept the cash£80,000

If you had stayed invested£100,000

Example 2 · it falls further

Selling avoids more loss.

The fund then falls another 20%.

If you sold and kept the cash£80,000

If you had stayed invested£64,000

You didn’t know which ending was coming. Fear alone cannot tell you when to sell, or when to return.

Two made-up outcomes, not a prediction. Cash earns no interest here; fees and tax are excluded. Some investments never recover.

Try thisCheck your reason for owning it, when you need the money and the loss you can bear.

Research: selling and returning to the market

Research

Of investors classified as panic sellers, 30.9% had not returned to risky assets by December 2015.

653,455 US brokerage accounts · 2003–2015

Not “never returned”. Selling could help during further falls and hurt during recovery.

Elkind and colleagues · 2022 ↗

A share has already risen. Should you buy now?

FOMO means fear of missing out. It can make you buy before you understand the risks.

Take a moment · choose an answer

A share is up 40%. Your group chat is full of winners. What should you check first?

The message

“It’s already up 40%.
Everyone’s making money.”

Your money

You put in £5,000. It falls 20% after you buy. You have £4,000 left, a £1,000 loss.

You do not get the earlier 40% rise. You only make or lose money from the price you pay.

A made-up example using 5% of your portfolio, not a suggested allocation. The price could keep rising; this example gives no odds.

Try thisExplain the business and the risk before the potential payoff. Count your whole account, not just your winners.

Research: following the crowd

Research

The stocks attracting the most intense Robinhood buying averaged −4.7% relative to the study’s benchmark over the next 20 trading days.

Selected stock group · 2018–2020

This is not the average customer’s loss or a prediction that popular shares will fall.

Barber and colleagues · 2022 ↗

Related sources

A separate five-minute simulated-trading experiment with 9,140 UK participants found push notifications increased the number of trades by 11%. It did not find significantly worse trading returns from that treatment. More activity is a different outcome from losing money. FCA, 2024 ↗

In one US brokerage study, larger allocations to lottery-like shares were associated with weaker performance. “Lottery-like” described low-priced shares with high volatility and unusually large upside moves; it did not mean every share someone hopes will rise tenfold. Kumar, 2009 ↗

A separate US study found shares with the largest recent one-day jumps had lower subsequent average returns. Neither study gives the odds that a hoped-for 10× investment goes to zero. Bali, Cakici and Whitelaw, 2011 ↗

Frequent trading can add up in fees.

You may pay each time you buy or sell, and again when you change currencies.

Buys or sells each month10

One buy + one sell = two trades.

Part of your portfolio used for each buy or sell

£1,000 each time.

Dealing / commission

per buy or sell

Currency conversion

each time you convert

Fees paid over one year£1,500

Dealing / commission£600

Currency conversion£900

You spend 1.5% of your starting portfolio on these fees, before any investment gains or losses.

Buying £1,000 costs £5 in commission and £7.50 to change currencies. Selling the same amount costs another £12.50: £25 in fees to buy and sell.

Are these realistic fees?

These are editable examples, not a live broker quote. AJ Bell’s standard online share fee is £5, with 0.75% FX on the first £10,000. Frequent-trader discounts and lower FX rates on larger trades can apply. Trading 212 Invest/ISA lists £0 commission and 0.15% FX. AJ Bell tariff ↗ · Trading 212 fees ↗

The example keeps every buy and sell the same size and converts pounds each time, at your chosen flat FX rate. Reusing foreign currency can avoid conversions. “Dealing” and “commission” are the same charge here. No spreads, tax, account fees, price changes or lost growth included. Rates checked 5 September 2026.

Each example trade and each charge is rounded to the nearest penny before adding the totals. Your broker may calculate or round charges differently.

Try thisCheck the total cost before pressing buy, not just whether the platform says “zero commission”.

Research: frequent trading and returns

Research

The most-active fifth of households earned 11.4% a year after trading costs. The broad market returned 17.9% a year.

66,465 US households · Feb 1991–Jan 1997

Both returns were positive. This historical gap is not a forecast; trading charges were higher then.

Barber & Odean · 2000 ↗

Related sources

Day trading has its own evidence and risks. In one Brazilian futures study, 97% of the 1,551 newcomers who persisted for more than 300 trading days lost money after exchange and brokerage fees. They began in 2013–2015 and were observed through 2017. This is a particular futures subgroup, not 97% of all investors. Chagué and colleagues, 2019 ↗

A bill can’t wait for a recovery.

If your investments fall before the bill is due, you still have to pay the full amount.

How much will you need?

If that money falls in value by20%

Extra money you would need for the bill£4,000

If kept in cash£20,000

After the chosen fall£16,000

You need £20,000 for a tax bill in six months. Keep it invested and a 20% fall leaves £16,000. The tax bill is still £20,000, so you need to find £4,000 elsewhere.

Only this portion funds the bill. Cash earns no interest here; no fees or tax. The fall is an illustration, not a prediction.

Keep in mindList the bills you need to pay and their due dates before deciding how much to invest.

Guidance: money you need soon

Regulator guidance

Check whether an investment could be worth less, or unavailable, when you need the money.

FCA · investment checks

This example calculates the gap in your bill money. It does not predict when an investment will recover.

FCA · five investment checks ↗

Use the score to understand the company.

Read the facts behind the number: profits, cash, debt and anything we could not check.

Illustrative score

85/100

What should you take from a score?

The businessDoes it make money?

Look at profits, cash and borrowing.

Your ownershipAre more shares being issued?

New shares can reduce the percentage of the company you own.

Missing informationWhat wasn’t checked?

Check missing figures and filing dates.

Try thisUse the score as a starting point. Open the flags and read the facts behind them.

Explore a company with Sensei

Guidance: understanding an investment

Regulator guidance

Check how an investment works, what it costs and whether its risks fit your circumstances.

FCA · investment checks

This supports asking questions; it is not an endorsement of Sensei’s score.

FCA · five investment checks ↗

Make a plan before the price moves.

Write down why you would buy, what could go wrong and when you would review the decision.

Take a moment · choose an answer

You bought for a one-week trade. It fell. Now you’re calling it a five-year investment. What should justify the change?

The original idea

“A short trade while the price is trending up.”

The new excuse

“I’ll hold for years, until I get my money back.”

Holding for longer does not undo the loss. You need a reason to own the business for those extra years.

A simple chart shows past price trends. You can mark prices where you will review your plan, but the chart cannot tell you what happens next.

Learn simple chart reading with Sensei

A video series on reading a chart before you trade. It opens on YouTube.

Watch the playlist ↗

Keep in mindA chart cannot promise a price target. A stop order can fill at a worse price than you expected.

Education, not a recommendation to trade. We have not verified the playlist’s “95% lose” claim. Completing the course does not establish your chance of success or promise better returns.

Guidance: deciding when to sell

Regulator guidance

The SEC’s checklist asks whether holdings still match your goals and what criteria you will use to sell.

SEC · Ask Questions

A plan supports deliberate review. It does not prove the course improves returns.

SEC · Ask Questions ↗

Five quick checks.

Use these questions to spot anything you have not checked. Ticking every box does not make an investment safe.

I can explain what I own and why.

Read company facts →

I know how a loss in one investment would affect all my money.

Check a possible loss →

I understand the costs and any borrowing.

Trading costs →Leverage →

I know what would make me reconsider this investment.

Review your plan →

I have checked when I need the money.

Money needed soon →

About this guide & its sources

Each lesson links to its sources and explains who was studied. Those results are not your personal odds of success.

The twelve lessons are an editorial selection, not a ranking of the biggest causes of loss. Education research supports improvements in knowledge and behaviour, not a promise of better returns from this page.

Read the financial education research ↗

Research reviewed 5 September 2026. Nothing is saved or submitted by these exercises.