50 rules millionaires use to trade stocks. 50 rules millionaires use to trade stock cut losses...

50 Rules Millionaires Use to Trade Stocks

50 Rules Millionaires Use to Trade Stock

Cut losses short; Let profits run. Sell an 8-12% loser. This is the “golden rule” of

investing


Create a trading plan. Test your plan. Then, stick to it.


The trend is your friend. Buy in an up-trending market. Use the 100-day moving average as

your guide


Good management creates value. Buy companies with good

leadership and management Scout out their track record.


Invest in No. 1. Buy companies that dominate their

sector. Why mess with second best? Your money is at stake.


Money flows to new ideas. Buy companies that have a track

record for new innovations. Understand the story and make

sure you like the ideas driving the company.


Buy companies with 20% revenue growth.

Investment life is too short to wait for sleepers that can’t grow 20% or more per year


Current earnings that reduce your risk.

Buy companies with earnings growth of 20% a year or more.


Annual earnings are a huge clue. Buy companies with annual

earnings growth of 25 to 50%.


Sell a technical breakout.


Sell double or triple tops. They are powerful indicators


Buy stocks that go against bear trends.

Buy stocks that rally even when the market is falling.

That’s usually a clue to a significant shift in attitude toward that company


Make the market come to you. Enter with buy stops $1 over the

market


Don’t be a bottom picker. But, if you occasionally break this

rule, use close stop loss orders


Safe harbor your profits. Don’t expose all of your profits to

the market. Buy real estate or some liquid

asset with part of your profit.


Add to winners, not your losers. Double down is double trouble

unless you have very deep pockets.


Don’t over-trade. Know when to step back and let

the market do your work


Take a few big risks. Put 5% of your risk capital on wild

possibilities. But don’t “bet the farm” on those

long shots.


Eat from a “Silver Spoon”. It is technical formation which

throws off good buy signals .


Know yourself. Know your ability and propensity

for risk Trade within those limits.


Learn to accept losses. Don’t cry over spilled milk Forget yesterday’s losers. Every day is a new beginning, a

fresh start.


Don’t put all your eggs in one basket.

Own 25 stocks over 5 sectors Spread your risk


Invest heavily in one or two winners.

Sounds conflicting to previous rule. Sometimes rules are in conflict


Write covered calls. They enhance your income. Ask your broker to explain. If he can’t, get a new one.


Take a trading break. The more you trade, the more you

need complete breaks to clear your mind..


Seek wise counsel. Then get a second opinion.


Stay liquid. Avoid big positions in low volume markets.


Buy the rumor, sell the fact. By the time an idea hits the major

media, chances are, the market has already discounted the information.


Keep one eye on gold. Gold price measures the world’s

fear factor. The higher the price, the higher the

fear.


Keep positive company. Positive people impact your

attitude and attitude affects your confidence.


Don’t be a pig. Bulls make a little, bears make a

little, and pigs get slaughtered.


Go with your gut. Sometimes. Not all the time.


Buy what you believe in. If you find a piece of software you

like, check out the company behind it.

Watch what your own family and friends are buying.


Buy big, add small. Build a trading pyramid by laying

the base investment, then making incrementally smaller additions as the market moves in your favor.


Allow only the “fittest” stocks to survive.

Sell the weakest stocks in your portfolio, even if they are winners.


Hold a few favorites for years. Try to avoid a short-term mindset

on more than 20% of your portfolios


Know when to hold and when to fold.

When you don’t get what you expect, move on to another stock


Milk the media. Get good ideas from smart people. Some of the smartest people spill

their best research in public


Use “trailing stops” to Jock in profits.

But use fixed stops to get out of losers.


Hire an expert. Compare your investment results

with “hired management”


Know the world’s power “waves.” A few huge trends drive corporate

growth


Watch the volume signals. Volume surges are a warning of an

impending change.


Invest gains in good causes. The hope of our grandchildren

rests in our investment in causes which create positive cultural change.


Avoid buying on margin. High leverage is high risk When you are wrong, margin

buying magnifies your error.


Buy stocks institutions buy. Read the financial data to see

which institutions are adding your favorite stock to their portfolios.


Buy stocks in tight supply. If you are considering two stocks,

one with 20 million shares outstanding, the other with 100 million, choose the smaller one


Never let a winner become a loser. Use stop loss orders to protect your

gains.


Be patient. Major price moves need time to

run.


Buy stocks with 85% relative strength.

Relative strength measures a stock’s price performance with all other stocks.


Don’t be penny-wise and pound-foolish.

When you decide to enter the market, avoid the temptation to put a price order in to get it just a bit cheaper.

50 rules millionaires use to trade stocks. 50 rules millionaires use to trade stock cut losses...

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