Cheers to a New Year and another chance for us to get it right!!!!
In the outcome of back-to-back holidays, eventful family gatherings & year-end celebrations & generally, too much food, there emerges the New Year’s Day & along with New Year comes the renowned NEW YEAR RESOLUTION! I am sure many people can’t wait until they can attempt to make a new start, reverse all the wrong doings and become a better person.
Every year millions, if not billions of people make new years resolutions, something they plan to do in the New Year and hopefully stick at forever!!!! It’s common practice for people to evaluate their lives at this point, and to consider what they can do to make the coming year their best yet. Why shouldn’t one apply that same thinking to his investments esp. in stock markets?
You too can make a Resolution like ‘BE A BETTER INVESTOR IN MARKETS’. Below mentioned are some of the Simple Rules which can be followed to fulfill this resolution:
• Never marry a stock.
• Cut your losses and let your profits run.
• The formula for success in the stock market: patience, perspective, and unfortunately, failure.
• Use stop-loss levels.
• Never overtrade.
• Never let a profit run into loss.
• Do not go against the major direction of the market.
• When in doubt, get out and stay out.
• Trade only in active stocks. Keep out of low flop ones.
• Avoid giving limit orders, especially for selling. Trade at the market.
• Don’t close your trades without a good reason.
• After having made a series of successful trades, don’t throw caution to the winds. Use a part of the surplus for a rainy day.
• Never buy just for the sake of dividends.
• Never average a loss.
• Never get out of the market just because you have lost patience, or get into the market because you are eager for some action.
• Never cancel a stop-loss order after you have placed it at the time you made the trade.
• Avoid getting in and out of the market too often.
• Never buy a stock just because its price is low or go short if you feel that the price is high.
• When the ship is sinking, don’t pray, JUMP.
• Buy a little in anticipation with a strict stop-loss. Buy more aggressively on confirmation.
• Don’t hedge just for the sake of hedging.
• Rely on technicals. Avoid getting carried away by news and rumors.
• Don’t bite more than you can chew.
• A buck in hand is worth two in the books.
• Nothing succeeds like success, so stick to the winning strategy.
• Relative strength works. There is nothing wrong with owning more of a winner.
• The market will do whatever it must, to prove the greatest number of investors wrong.
• If you have never lost money in the market, you’ve never played the game.
• You ought to be able to make more money than you lose, in the stock market that’s the only definition of being right.
• Let others fish for bottoms.
• Bet before the race is run, not when it nears the finish line.
• You can always buy back a stock.
• Anyone who has the compulsion to be perfect, to be so free from error that every deed will prove him right, will be driven mad by the stock market.
• The indicators should be used to provide market timing. Don’t put any more burdens on them than that.
• Not all emotions are misplaced at the market; after all, we’re not entirely crazy and many times our feelings may parallel stock action; our instincts may be perceptive. But we will bet, those insights usually come when you have no personal stake in the matter.
• You are not going to make money every time. No one does.
• The accumulation of capital over the years is based on the old saying, “It’s not how much you make, but how much you don’t lose.”
• There is a right time to sell, but you can buy at many different times.
• Let the market tell you. Don’t try to tell the market.
• Do not rationalize failure.
• The decisive act of selling may turn out, with hindsight, to be a mistake, but the indecisive act of not selling can turn out to be a disaster. Not to sell, is perhaps the riskiest investment approach of all.
• Indecision is habit-forming, and can be injurious to your wealth.
• The price you paid for a stock is absolutely irrelevant to where and when it should be sold.
• When the market does the unexpected it is doubly significant.
• Paper trades are always profitable.
• Rarely will one indicator act in isolation; usually many will be saying “Sell” in various tones at just about the same time. When they speak in harmony, believe them.
• When a lot of people are shouting for your stocks, oblige them.
• Better safe than sorry.
PS: The above mentioned are just my thoughts on the basis of my experience, they are not recommendations or strict rules & may not necessarily be right in all situations.
Year’s end is neither an end nor a beginning but a going on, with all the wisdom that experience can instill in us.
- Hal Borland
