Everyone investing in stocks wants to make money.
But making money from the stock market is not that easy.
Here are a few things for successful stock investing.
1.
Always have an investment plan.
This includes at what price you want to buy a stock, what will be your stop loss level, what is your first target price, what is your second target price.
Having investment plan is a must for any serious investor, but sticking to it is even more important.
2.
Never change your investment objective.
Many people are so hesitant to cut loss, thus holding on to a stock and hoping the stock to come back up some day.
Well, that day could be years from now or never come at all.
For these people, long term investment is their short term investment that has gone bad.
Stick to the rules.
Stocks for long term holding are different in nature from those for short term trading.
3.
Don't fully invest.
This is the difference between professional investors and individual investors.
Individual investors tend to fully invest to maximize their return.
But many successful fund managers invest only up to 90% of their total capital.
This will give some room to buy stocks at a bargain when the market dips into a correction.
4.
Invest only in stocks you understand.
There are so many stocks to pick out there, why bother to invest in any stock whose business is too complicated to understand? Stick to the ones you are familiar with, or the ones whose products you use, thus giving you comfort and peace of mind.
5.
Do your homework.
Occasionally you get an email offering investment advice or get an investment tip from the media or your broker, or even hear a rumor from someone.
While you can always make use of it, don't forget to do your own research.
Do not buy any stock or any other investment without analyzing it yourself.
6.
Never average down, do average up.
Many people like to buy more stocks to lower down their entry price.
Be watchful as this may not be just a short term reversal.
Instead, do average up if the stock continues showing strong momentum.
This will let you commit your capital at few stages and allow you to minimize your risk.
7.
Always diversify.
Regardless how confident you are on one stock, always allocate your capital no more than 5% into one single stock.
Thus, if it turns bad, your overall portfolio will not suffer.
8.
Make a record of your entries.
Be diligent and always take note of your entries and the reasons behind it.
That way you can review and learn your mistakes and successes.