Below is the third and last installment on the stock market tips -

21. Not all investments are created equal. Do not treat all investments the same way. Learn their specific characteristics and choose the right tool for the job.

22. Look through other people’s eyes. Try to understand why a buyer would buy and why a seller would sell. This will enable you to be more flexible and will maximize your potential gain.

23. Don’t pile your bet on the winners. Avoid the natural tendency toward increasing your position in successful investments. Let your winners ride and look for more winners.

24. Don’t try to time the market. Do not guess where the top and bottom of the market is. Do not be afraid when the markets or your investments, reach all time highs or lows. Market timing myths like January effect and October effect are not real. Use your strategy and research as a guide.

25. Never sell into a panic. Self-discipline is your friend when the market goes against your position. Do your investments become unsound just because the market tanked? Bad market does not make your investments bad.

26. Don’t throw good money after bad. If your investment is taking a dive, do your research and understand why. Do not keep piling in money to cost average down; something may have changed since you last did your research.

27. Don’t believe the hype. Do not listen to the news and believe everything that is said. Use your strategy and research as a guide.

28. Regular contribution is your friend. If you have a big chunk of money, don’t use dollar cost averaging. It’s usually better to invest it all instead. Regularly contribute to add money to your investments.

29. Avoid taking small profits and big losses. Do not sell your rising star just because it doubled in a few days. Do your research. If it is still a good investment, keep it.

30. Reinvest for success. If your investment pays dividend or distribute capital gains, reinvest that money. Do some research on automatic reinvestment programs and participate in it to avoid any minimum investment rule or trading fee.

31. Find your magic formula. If you have an expertise in a certain area, leverage it to boost your chance of success. If you figured out something that works, stick to it until you can find a better magic formula.

32. Learn from your mistakes. Never let a mistake pass without learning from it. Ask yourself what happened and why. It would be best that you keep a log of your investment activities and write down what happened, why you made them, etc.

33. Avoid trading on margin. Trading on margin is a risky business. Always invest within your capabilities. Keep in mind that at the very least, you are guaranteed to lose the interest on the money that you have borrowed.

34. Be flexible. As your knowledge grows with time and situation changes, be ready to reevaluate everything and alter your plan depending on the current situation.

35. Have fun. Finally, have fun investing! Here is $1,000,000 in play money to try out your investing strategy on the stock market game. It’s free and you can even earn real money.

For those who want to review the previous tips, below are the links to the previous posts -
Stock Market Investing Tips
Part 2: Stock Market Investing Tips

One Response to “Part 3: Stock Market Investing Tips”