7 Golden Rules of Investing in Stock Markets

One does not become a proficient investor overnight, that’s for sure. It takes a lot of determination, patience and, most of all, practice.

If you’re interested in getting in the pro league of stock market investors – we assume you are because you’re reading this, you should be familiar with the golden rules of investing. Let us introduce you to them.

1. There are no tops and no bottoms

Contrariwise to what thousands of investors think, you can’t really catch the tops or bottoms, i.e. time the stock market. There are too many cycles involved for this to be successful. You have to live and think in the moment.

2. Remove emotions from the equation

Investing is neither for the faint of heart, nor for those who are governed by greed or fear. These two never led to anything good. Approach the market with a clear mind and a goal you can achieve. Being greedy is a road that, once taken, you can’t get back from.

Emotions and investing don’t go together at all.

3. Always make informed decisions

Do not invest on a market before you’ve gotten an understanding of it. Stock markets are volatile and it takes a lot of research to make sure you’re going to get a decent enough profit.

Start investing without researching the market first and the next day you’ll send a resume to Macy’s. Successful investors like Warren Buffet and others spend their free time learning, and so should you.

4. Go against the grain

Warren Buffet once said: “Be fearful when others are greedy and greedy when others are fearful". What does this mean? First, you’re better on your own. Second, understand what motivates people to do certain actions on the stock markets.

Don’t just follow on what other people do, because chances are they’re wrong in 90% of the time. Subsequently, you will, too. Do your own thing and keep in mind that it’s never a good thing to work with other people in this business.

5. Don’t be impatient

What looks like a great deal could turn out to be a hole in your budget so deep that you won’t be able to plaster it. Don’t make decisions in lines with your impulses. You’ll lose a ton of money.

Take your time to study the market. Wait to see whether or not things stay as they were, and make a decision after.

6. Diversify your portfolio

What was profitable one year ago may not be profitable the next. Try to have a portfolio as diversified as possible. The more industries you invest in, the greater the chances of you being extremely successful and rotten rich.

7. Don’t underestimate the “Stop loss”

It can save you from a lot of trouble. Many investors scoff when they hear about Stop Loss, but then again, don’t go with the herd, especially when you’re new to investing. For your first years, the Stop Loss will be your best friend.

Even though it’s widely badmouthed, you shouldn’t care for the hecklers. Most of them used and perhaps still use this feature, but they’re too proud to admit it. Stay safe on your own terms.

Conclusion

Investing is a tricky business. If you already knew all these rules and already performed well on virtual demo accounts, maybe it’s time for you to open a real trading account.

Once you’ve done that, you’ll be, officially, an investor. Whenever in doubt, just take a look at this list again. These rules have existed ever since being an investor became a job. You can rest assured they were created for good reasons.