2006.06.01 [2/2]

meskalepeska | 2006-06-01 14:07 | perskaitė: 467
2006.06.01 [2/2] 12 Basic Stock Investing Rules Every Successful Investor Should Follow By C.C. Collins 1 - 6 Rules 7. You must let your profits run and cut your losses q

12 Basic Stock Investing Rules Every Successful Investor Should Follow

By C.C. Collins




1 - 6 Rules



7. You must let your profits run and cut your losses quickly if you are to have any chance of being successful. Trading discipline is not a sufficient condition to make money in the markets, but it is a necessary condition. If you do not practice highly disciplined trading, you will not make money over the long term. This is a stock trading “system” in itself.



8. The Efficient Market Hypothesis is fallacious and is actually a derivative of the perfect competition model of capitalism. The Efficient Market Hypothesis at root shares many of the same false premises as the perfect competition paradigm as described by a well known economist.



The perfect competition model is not based on anything that exists on this earth. Consistently profitable professional traders simply have better information - and they act on it. Most non-professionals trade strictly on emotion, and lose much more money than they earn.



The combination of superior information for some investors and the usual panic as losses mount caused by buying high and selling low for others, creates inefficient markets.



9. Traditional technical and fundamental analysis alone may not enable you to consistently make money in the markets. Successful market timing is possible but not with the tools of analysis that most people employ.



If you eliminate optimization, data mining, subjectivism, and other such statistical tricks and data manipulation, most trading ideas are losers.



10. Never trust the advice and/or ideas of trading software vendors, stock trading system sellers, market commentators, financial analysts, brokers, newsletter publishers, trading authors, etc., unless they trade their own money and have traded successfully for years.



Note those that have traded successfully over very long periods of time are very few in number. Keep in mind that Wall Street and other financial firms make money by selling you something - not instilling wisdom in you. You should make your own trading decisions based on a rational analysis of all the facts.



11. The worst thing an investor can do is take a large loss on their position or portfolio. Market timing can help avert this much too common experience.



You can avoid making that huge mistake by avoiding buying things when they are high. It should be obvious that you should only buy when stocks are low and only sell when stocks are high.



Since your starting point is critical in determining your total return, if you buy low, your long term investment results are irrefutably better than someone that bought high.



12. The most successful investing methods should take most individuals no more than four or five hours per week and, for the majority of us, only one or two hours per week with little to no stress involved.

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2006 06 01 15:37     #6020
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