12 Common Sense Investing Rules

David Frost // Additional Articles


November 20  

The market can and will stay irrational much longer than you can stay solvent

Do NOT ever make an investment or trade with money you cannot afford to lose

Before you purchase any investment, understand why you are buying it and what your objective is

Never put more than 10% of your capital into one position

Sell your losers and keep your winners

Never average down (see rule #5)

Do not make decisions based on the news – the media usually makes up the story to fit the trend

Do not make a trade because you feel like you to have to trade.  Let a trade come to you

If you let your emotions dictate a buy or sell, you will most likely lose

Bulls make money, Bears make money, Pigs get slaughtered

The market is right 100% of the time, what you think should happen doesn’t matter

Don’t listen to your friend about a stock he is sure about.  If it’s such a great idea, why would he tell you?  Most of the time he will lose, don’t lose with him – misery loves company

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About the Author

Trading and investing in markets is second nature to some, but a mystery to others. The goal is to provide a forum where everyday people aspiring to be part time or full time traders will learn how view markets differently and profit beyond their wildest dreams.

David Frost