6 Investing Guidelines

You are the most important component of your investing success. If you can unemotionally approach the market and adhere to your trading guidelines, then you stand a much better chance of being successful than if you let your emotions take control. To help you become your own best investing asset, we'll help you set reasonable expectations for your investing returns and understand your psychological biases.

1. Protect your investment capital

Have you ever wondered what the secret of successful investing really is? It is proper money management and diversification. The secret lies in the small, simple things that have the biggest impact on the end result. Proper money management and diversification can help you protect your capital so that you can achieve the most consistent gains.

2. Analyzing from the top down

Did you know that every stock belongs to an industry group? A critical step in the investing process is monitoring the movement of institutional money flow into or out of these groups. If a group is out of favor, it indicates that institutional money is flowing out of those stocks.

3. Conduct a thorough fundamental analysis

Whether you find stocks through a search or in the newspaper, or if you prefer to invest in a company with which you're familiar. By doing a quick fundamental analysis, you can confidently reduce or limit the amount of emotion that influences investment decisions: either a stock passes or it doesn't. Fundamentals tell you the good, the bad, and the ugly to help reduce risk. Good corporate fundamentals provide a great foundation on which stock prices are built.

4. Search for additional strong stocks

Now that you have performed top-down and fundamental analysis, you know what type of stock to look for. The next step is to search for other opportunities to complement your portfolio. Knowing how to look for these opportunities puts you in control of your investing. By using stock filtering tools on yahoo finance or finviz can aid you in this selection process. Make sure that the stocks selected pass all the previous tests.

5. Conduct a thorough technical analysis

After you have compiled a list of fundamentally solid stocks, you can monitor them for the opportune time to buy and sell according to technical indicators. Technical analysis is useful in forecasting a stock price's potential direction-allowing you to better time your entry and exit points.

6. Manage your portfolio

Investors looking for great stocks and watching for buy and sell opportunities, must manage that information effectively. The more stocks you're able to track effectively, the more opportunities you have to find good investments. Stocks in the same industry generally move in the same direction. If the group is strong, it's an indication that institutional money is flowing strongly into the group, causing most stocks to rise. The best-performing stocks in the group generally make the strongest moves, but even lower-quality stocks in a strong group will typically rise with the rest of the group. Industry group research allows you to better focus your attention on the very best market sectors and to make sure that a stock you are considering is in an up trending industry.