Can you give me 3 simple trading/investing rules to live by?
- tiescoreLv 69 months agoFavorite Answer
1) Make a Plan
2) Make investing a habit
3) Never Panic
- 9 months ago
Rule 1: Always Use a Trading Plan
Rule 2: Treat Trading Like a Business
Rule 3: Use Technology to Your Advantage
Rule 4: Protect Your Trading Capital
Rule 5: Become a Student of the Markets
Rule 6: Risk Only What You Can Afford to Lose
- SumDudeLv 79 months ago
Buy high, sell low, and claim the capital loses on your 1040. #2 - always bet on red. Stay away from Enron and any other stock at zero.
- 9 months ago
1. Have a plan and stick by it. No matter how much it hurts...no matter how much more you think you can make. If you buy at 10, set your stop at 8 and price target at 15...stick by it. Write out your entry and exits with strategies and contingencies.
2. Keep your stop losses. No matter how much it hurts...no matter how much your brain tells you it will turn around...suck it up, take the loss and keep it. This is one of the ways that we blow up our accounts. We think, "it can't possibly go any lower". Then guess what, it will often go lower and lower and lower...until you get to the point where you are like, screw it, I've already lost so much I'm just going to wait.
3. Don't double down. This, combined with number 2, is how we blow up our accounts. You are in BABA at 179 for 100 shares...it was 205 a few months ago...it goes up to 182 (you are up $300)...you are like, here we go...then it goes down (maybe the President Tweeted) to 176. OK, now you are down $200 but it is going back up, right? The next day it drops to 175...it hasn't been 175 for a year, it is coming back. There is a trade deal coming....so you double down (on margin). Another 100 shares. This thing is going back at least to 183. Next day China has a press release that they won't cave on a deal. Stock goes to 170...but you are thinking, it can't go any lower and they are going to cut a trade deal. They are in talks and news is coming out tomorrow. President Trump needs a deal so he can win reelection. So you double down again, now you are in for 400 shares. Saturday comes and Mnuchin states, China went back on their agreement, there is no deal...and next thing you know BABA is down to 149. Your original account was $30k...but you are now down $10k.
Lesson One: Have a stop loss and stick to it. You could have walked away with a $200 or $500 loss...instead of $10,000.
Lesson Two: Don't double down...don't try to determine where the bottom is...or as they say, don't try to catch the falling knife.
These 3 are for trading, not so much investing. For investing (long term) I bass it off company fundamentals, go with the large companies with amazingly genius CEOs like Amazon, and diversify as much as I can.
Generally don't invest in small caps...you can trade them...don't invest in them....read the SEC filings, understand the pump and dump and how they make money off of offerings etc...
Large firms control everything. That is reality. Goldman Sachs earns money approximately 230 days out of 250 days in the trading year. They know what they are doing, hire geniuses, and have all the capital to manipulate the markets and do what they want. The key then is to do what they are doing (most people do the opposite and therefore lose).
The reality is you aren't going to make a "huge pile of money" off of investing in mutual funds. What a joke. You might make 10% and when you adjust for inflation that goes down to the equivalent of like 7%. The draw is that it is easy/lazy. You just have your money go to an account every month, pay them a fee, and just watch.
90% of daytraders will fail...that is reality. It is actual work and it isn't for everyone. For the 10% that succeed, it can be really good. There are probably many that learn a lot and fall somewhere in between. If you lose $10k in your first year, but learn enough about the ebbs and flows of the market that you can pull 20% rather than 10% from a mutual fund per year...over 20 or 30 years that is going to make a huge difference. Just have to pay your "tuition" up front.
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- BryceLv 79 months ago
1. Don't trade.
2. Buy the market in the form of low-fee mutual funds, not single stocks.
3. Keep adding to it, don't sell, and reinvest distributions.
4. Build a huge pile of money.
- 9 months ago
- JazSincLv 79 months ago
1. Buy low sell high
2. Sell high buy low
3. Never lose more money than you can afford to lose
- RobinLv 79 months ago
Do an MBA ................................