GOLDEN RULES OF BUYING SHARES

CHAPTER 16
GOLDEN RULES OF BUYING SHARES
9 golden rules of buying shares

1. STICK TO THE RULES- Always remember that the stock prices would go up and down, what is needed is to stick to your strategy which you have planned. Swaying away from the rules would only bring losses.
2. DIVERSIFY – Do not invest all your eggs in one basket; invest in various sectors not just the one which is mining.
3. BUY SHARES THAT SUIT YOUR TRADING CYCLES – if you are buying shares for a long term it definitely wont suit you if you are short term trader and it goes other way also... short term shares wont suit the long term trader as well.
4. KNOW YOUR RISK TOLERNACE – A speculative share has a different risk profile as to out of favor “ blue chip “.Allocate your capital according to your own risk tolerance and the risk profile of the trade.
5. DON’T RUSH IN – The market will be still there waiting for you when you are ready to trade. Learn about the market before you start trading particularly the new investors. The best way to start is with the PAPER TRADE, so as to learn the basics first.
6. DO NOT GET GREEDY – Don’t think that you will be a millionaire in a day, be practical and not over realistic. Don’t think it’s very easy, as it’s very easy to lose money also in the trade market.
7. ONKY INVEST WHAT YOU CAN AFFORD TO LOSE – if the shares are the cause of your worries then definitely either you have invested in the wrong ones, or you have far too many to handle, so SELL them , nothing in the world d is more important than your peace of mind.
8. NEVER EVER CHASE SHARES – exercise patience, never run behind the shares and purchase beyond your limits, because the time will definitely come when you will be able to buy them within your limits.
9. KEEP ACCURATE UP TO DATE RECORDS- The most important of all, for penalties for not declaring your profits and not paying the capital gains are too much high. So stick to the rules.