Important rules for Investment

It is always important to remember certain important rules for all investors before trading in stock market,

1) Do not invest with borrow money. 

People always hope that the price will go even higher at the current price. So, they choose to borrow money to increase their stock portfolio.  This is not highly recommended, what if the stock price drop? No one can guarantee what will happen tomorrow, even on the market.

2) Diversify the portfolio

Everyone should diversify their stocks. Do not only 'ALL IN' in one single particular stock as the risk is way too high. Over diversify also quite difficult as too many stocks to monitor. Hence, please only select those stocks that you have done your detailed research on it.

3) Cut loss 

This is the most important rule, everyone should set a "Cut Loss" price for every stock. Many people loss a lot of money due to they do not perform a cut loss system. I will explain further on cut loss in the next blog as it involved Technical Analysis.

4) Invest as early as possible

Everyone learn from mistakes. By investing early, you could understand more about stocks and you might achieve the best returns after many years of investment. Always remember, stock investment is not a Rich Man's Game, anyone could be the stakeholders and gain profits throughout the years by dividends.

5) Avoid poor earning companies

Never invest into a company that have been losing money for the past few years. Normally, i will not invest in those companies that have negative earning (Not even a single year for the past 10 years).

6) Fundamental research

If you purchase stocks without a proper research, you are actually gambling money and you may lose money too. Hence, it is important to make sure that your selective stocks are not overpriced or no growing company. Fundamental research include PE, ROE, EPS, etc. I would be explaining it in details in the later part of the blog.

7) Do not over trading 

When a person over trading on the stock market, they will lose their conscious. They will slowly becoming a gambler and slowly they will lose track on their originally planned strategies. A good investor will only invest in a good fundamental stock and hold it for many years. For instance, the way that Warren Buffet invested in Coca-Cola.

Besides, I came across that Barclay Wall Street has set 10 Power Commandments rules for their employees, which it is quite interesting as it teaches people to respect their job as well as themselves while doing working in a investment banking.

Invest smart and don't lose money on the stock market.