I only have a few rules for investing, but they work.
1. Only buy good companies at good prices. Stick to fairly large companies with a proven track record. Stocks fluctuate - look for opportunities to buy when a stock is on sale. Don’t buy a stock just because it’s a good deal - you have to consider why the price has dropped.
2. Don’t be greedy. Every time you buy a stock, consider where your exit point is. I always put in a sell order the same day I buy a stock - if the price goes up a certain amount, it automatically sells. . I aim to make about 5% with each trade. Sometimes I lose out on potential earnings, but I hardly ever lose.
3. Diversify. Stocks will go up and down. As long as you don’t buy the wrong stock or overpay in the first place, you will make money on a trade as long as you hold it long enough. By buying multiple companies in multiple industries, you will be more likely to make more money more consistently.
4. It’s ok to not trade. Sometimes weeks go by between trades. Sometimes you make 10-15 trades in one day. Only invest when it makes sense.
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