Providing investor education, product enhancements and software solutions on how to become a more successful online trader with The Investrio Mentor Center. Understanding the Stock Market The purpose of today's column is to provide you with invaluable insights into the Stock Market. Today’s Topic: 25 TRIED AND TESTED RULES FOR ONLINE INVESTORS & TRADERS I have been an investor for over 30 years. Over that time I have learned a lot. Many of the lessons were expensive. As time went on I condensed my expensive experiences into rules that I use every day as a full-time investor using The Mentor Center. Today I would like to share some of those rules with you. Each of these rules could be the subject of an entire article (and in the future, many will be). But today I just want to share the list of rules. Do with them as you will. Tape them on the wall next to your computer. Use a few as jumping-off points for discussions in your trading team. Write an article based on one or more rules and submit it to us for publication! Most important, I suggest that you follow them. I've already paid for them. There's no sense in you spending your money to learn them the hard way... 1) If you are a new investor, PAPER TRADE before you put your hard-earned money into the market. 2) If you are an experienced investor, PAPER TRADE any new system before you put your hard-earned money into it. Don't let pride cost you money - the fact that you've been successful with other systems is no guarantee that you'll duplicate that success with a new one. 3) Don't invest in anything you don't understand. 4) Determine your "Trading Personality." It is essential to know whether you are a "Trader" or an "Investor" by inclination. 5) Be aware that your "Trading Personality" may change with time and experience; according to your work schedule; or with changes in your financial circumstances. 6) "Buy and Hold" only works in bull markets (and even in bull markets, trading works better). 7) Most mutual funds under-perform market benchmarks. If you feel you must invest in a mutual fund, consider a good index fund. The fund costs are lower, and you'll probably make better returns. 8) The trend is your friend. Only salmon swim upstream. 9) Forget "Buy Low & Sell High." Trying to catch the bottom on a stock or index is like trying to catch a falling knife. 10) It is even harder to sell at the top. Once stocks turn, they usually go down twice as fast as they went up. Don't be greedy; sell before you think the top is near. (See next rule.) 11) Don't sell a position as soon as it shows a profit. Wait until it shows signs of losing momentum, and then sell. Your average profit will be much greater. 12) Buy high and sell higher. The only way to be reasonably sure you have seen the bottom is to wait until a stock has moved up 10% to 20%. It's much safer to buy then, rather than buying a stock on its way down in hopes of catching the bottom. 13) There's a reason why cheap stocks are cheap. 14) Cheap stocks don't double in price any faster than higher-priced stocks. 15) Most stocks that fall below $5 will never be $20 again. 16) Never fall in love with a stock - it sure won't love you back. 17) Always use protective stocks when buying stocks, options or futures. Only a fool flies on the trapeze without a safety net. 18) Never "average down." If a position isn't working get out with a small loss; it's stupid to throw good money after bad. 19) Don't quit your day job until you're winning over 80% of the time. 20) Never put more than 5% of your investment capital in any position. 21) Never commit all our money to the market, no matter how well things are going. If the market turns against you, need to have money available to begin again. 22) Don't sell when a stock nears or hits a new high. Investors often fear being in uncharted territory, but that's often the best place to be. Stocks often "take off" after hitting new highs. 23) Base your investment decisions on the quality of the investment, not on tax implications. 24) Don't keep losing money trying to prove you were right. Nobody cares. 25) NO ONE - no broker, no mutual fund manager, no 401K executive - cares about your money as much as you do. Get the right TOOLS and LEARN how to manage your own money. Until You have the Confidence, PAPER TRADE…PAPER TRADE…PAPER TRADE! u can learn how to manage your own money. Who cares about your money more than you do anyway? You can test drive The Mentor Center absolutely risk free. 100% Money Back Guarantee! START INCREASING YOUR KNOWLEDGE & RETURNS TODAY. Click Here Thank you again, for the opportunity to share our knowledge and experience with you. “More Millionaires have been created from the stock market than any other source” --Bloomberg Magazine Copyright © 2000-2003 Wall Street Mentors Inc. All Rights Reserved. Member Access |
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