Home | List of Articles | Submit an Article | Contact Us

Creating Wealth in Stock Market

The 12 Rules of How to Avoid Losing and Start Making Money from the Stock Market

RULE 1: WHY DO YOU INVEST?

Make more money, this is the answer to most people. If your reason is to make more money, then ask yourself these three questions:

1.Is your strategy making money?
2.Is your strategy safe?
3.How to increase the profit and minimize the risk?

RULE 2: HOW TO CREATE WEALTH IN STOCK MARKET WITH JUST $1,000

Let say we invest some lower price stocks with just $1,000 in the stock market, invest twice a year for short-to-medium term. If each time the return is double, you will make one million dollar cash within 5 years. If your starting capital is $20,000, after 3 years you will make one million dollar cash.

If you are using the same $1,000 capital, invest twice a year, but the return is only 50%, you will make one million dollar cash after 9 years.

So we can always start small. However, it is very important that we know how to select high profit and low risk stocks.

RULE 3: DON'T GET OBSESSED WITH STOCKS

Sitting and monitoring the market whole day long will not bring you profit. Instead, it increases pressure and misleads your judgment.

RULE 4: NEVER GAMBLE

95% of the people always buy at the highest price. They don’t really know when to buy, just relying on news, rumors and tips. Only 5% of the people knows how to trade at the lowest price. That’s why 95% are losing money, only the 5% are making money. Investment Builds Wealth, Gambling Definitely Lose !

RULE 5: SAY GOODBYE TO NEWS

News used to be able to predict the market trend. But not anymore, it is difficult to judge which news could actually influence the market nowadays.

RULE 6: DO YOUR OWN ANALYSIS, FORGET ABOUT TIPS

Before investing, ask yourself these four questions:

1.How many people have already heard about the tips before you? If many have heard about it before you, this news is already obsolete. The price is already high.

2.How long have the tips been spreading before it reaches you? The next day?

3.Who told you? Listed company director? Or friends?

4.Assuming that the tip is true, would you possibly know about it? Normally insider news is not disclosed.

RULE 7: SELL YOUR STOCKS EVEN LOSING MONEY

It is easier to be said than done.

Sell at a loss is a difficult decision. Your heart will object, and your feeling will say "It is going to rebound, don't sell." Eventually price dropped further, causing a much tragic lost.

RULE 8: DON'T JUST FOCUS ON MAKING MONEY

How to protect your capital is much more important. Don’t try to make 100% profit. It is already good enough to have a 60% profit margin.

RULE 9: HISTORY WILL NOT ALWAYS REPEAT

Everyone expects to make some money from the stock market before Christmas, New Year, annual budget announcement or election, but the stock market is not always bullish during these events. We can say history is not always repeated. The best way is “Let the Market Lead us”.

RULE 10: QUOTES FROM WARREN BUFFET

There are only two rules to make money in stock market:

The first rule: Never lose your money. The second rule: Never forget the first rule.

RULE 11: TURN BAD STOCKS INTO GOOD STOCKS, DON’T JUST HOLD YOUR STOCKS

Don’t hold your stock too long, there is a value when stocks are sold.

How long have you been holding your stocks until now? Since Year 1993? 1997? Or Year 2000?

Why didn't you exercise your stocks? Long term investment strategy is not practical anymore. Even the blue chips also crash when the market collapses.

The best strategy is to sell the stocks that are not earning money, and reselect some good counters. Buy low, sell high for several times will earn you more than enough to compensate the lost.

RULE 12: WAKE UP FROM MISTAKES

Stop investing if you are not sure of when to buy or sell.

Without the knowledge of investment, you are bound to lose again. This is an age of information. Investors are using knowledge, techniques and strategies to make money. Without investment knowledge, how do you protect your money?

Building wealth through investing starts with securing your capital.

Author: Dr. Steven Lee (Ph.D) is the creator of “Power System” and also the author of two books on how to invest in stock market. There is "Creating Wealth in Stock Market" and "The Magic Idea of Getting Rich". Free e-book "Money Fish"
Your New Way to Become a Millionaire
Website: http://www.DrStevenLee.com

Related Articles:

Creating Wealth in Stock Market - The 12 Rules of How to Avoid Losing and Start Making Money from the Stock Market RULE 1: WHY DO YOU INVEST? Make more money, this is the answer to most people. If your reason is to make more money, then ask yourself these three questions: 1.Is your strategy making money?
2.Is your strategy saf ...

The Indian Stock Market - The working of stock exchanges in India started in 1875. BSE is the oldest stock market in India. The history of Indian stock trading starts with 318 persons taking membership in Native Share and Stock Brokers Association, which we now know by the name Bombay Stock Exchange or BSE in short. In 1965, BSE got perman ...

Don't Overlook Three Symbol Stocks - One of the things a new trader learns within a few weeks or so of beginning his new adventure into the world of day trading is the difference between three symbol stocks and four symbol stocks. The first thing to be learned, with a few exceptions, is that three symbol stocks are listed on the NYSE (New York ...

Stockholding Strategies for Internet Businesses - Sometime ago I started an Internet retail business. I won't go into what that business was as I have since sold it but what I will relate are the mistakes I made and the lessons I learnt with respect to stock holding and supplying products. Every day thousands of people have ideas for new Internet based busi ...

Online Stock Trading Questions That The Market Professional Don't Want You To Ask - Sometime ago I started an Internet retail business. I won't go into what that business was as I have since sold it but what I will relate are the mistakes I made and the lessons I learnt with respect to stock holding and supplying products. Every day thousands of people have ideas for new Internet based busi ...

5 Tips for Investing in Penny Stocks - Investing in penny stocks provides traders with the opportunity to dramatically increase their profits, however, it also provides an equal opportunity to lose your trading capital quickly. These 5 tips will help you lower the risk of one of the riskiest investment vehicles. 1. Penny Stocks are a penny for a ...

Top Investments and Stock Picks for 2006 - If you read the headlines today you will hear everything from recession, decline, slow start, etc... Everyone is commenting on losses or very marginal gains. Yet there are some investors like me that did really well in the last few years and are continuing to do well - and none of us fell for the late night TV inv ...

For a Complete list of Articles with summaries Click Here