How to be a good Investor

Anyone with a desire to master making money in the market, and has understood how the stock market works, all that’s left to do is follow a set of trading rules. It sounds simple, but it really is that easy.

The idea is not to look for 100% windfalls, but to look for consistency. What can you do consistently, that everytime it’s done, will yield a certain return. That's what you are after.

Common mistakes failed investors make

- Don’t have a good understanding of how the market works
Some people decide to buy a stock because they received a hot stock tip. It is risky to participate in a stock without even knowing what the company does, without understanding the numbers behind the company or knowing if the company is fundamentally strong or weak.

- Using your entire investment capital in one stock/sector
This is an obvious call for disaster. Stocks in similar sectors are usually affected by the same factors. Trading this way may earn you huge gains but remember that it could also result in huge losses.

- Letting your emotions take over
I know it’s hard when it involves your own money and there’s nothing bad about being protective of your capital but getting your emotions involved does more harm than good. To do this, you need to fully automate your trades, calculate your potential loss (make sure you are comfortable with losing that amount) and enter a stop loss into the system. This will take you out of the trade in the event it does not go your way.

- Spending too much time watching the market
It really only require 15 minutes. Anything more is too much. The beauty of this is that it's a fully hands off strategy. Once you've entered your trades, watch the market for 15 minutes, see if your stop loss needs to be adjusted and close the charts. Trading successfully in the stock market isn't going to be based on your ability to watch it.

- Violating the rules, cut corners when you start seeing sequential gains
After trading for a while and seeing sequential gains, there's a high tendency to try to cut corners to our trading plan, hoping to catch a higher profit and accepting higher risks. Try to manage this and stick to the plan.

Your trading plan should always look to lose small, win big.