5 Rules You Need to Take into Heart to Increase Stock Market Success
   Updated: 2022-11-01T13:16:41Z
    minute read


It is without a doubt that the Stock Market gives the best rate of return compared to other investments. This is why many of us entered this business to find our path to financial success.



5 Rules You Need to Take into Heart to Increase Stock Market Success
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    However, not everyone will start as an expert and profit from it. This is just how reality works.


    But just like any other skill, expertise comes with knowledge and experience. Though the Stock Market experience comes with a price, make sure that you manage your risks.


    So what are the things that you need to learn in this field?


    You need to build your Foundational Knowledge as this will be your guiding principle in your journey.



    The 5 Foundations You Need to Stock Market Success



    Build a Plan


    Before you invest your hard-earned money, make sure you have a plan that you must strictly follow regardless of the market conditions.


    So what are these plans?


    There is no definite answer as this is catered to each individual's risk appetite. But we can at least have an overview of it:


    1. Research - You need to know how the business operates and how it is making money. This will help you in your decision-making in choosing a stock.
    2. Capital - You need money to make money in the Stock Market. Make sure that the funds you pool for this investment are your disposable funds. Don't even try to use your Emergency or Retirement Fund for this!
    3. Risk Management - Even if you diligently research the stock, sometimes the market will not go in your way. When this time comes, you need to cut your losses. This is especially true if you are trading stock.
    4. Trust Yourself - Don't be tempted by the hype and abandon your plan. Instead, check the news, if it aligns with your framework. If it is, then you can take action.



    Determine Your "Why" You Are Even in the Stock Market


    Find out your Why.


    Of course, the ultimate goal is to earn money. It is a no-brainer. However, the next question is, money for what?


    Write "why" you want money and write it in detail, preferably on paper.


    If you did this, you most likely treat what you've written as goals that need to be achieved than just wishful thinking.


    Reference: You are 42 percent more likely to achieve your goals if you write them down.



    Choose a Field of Discipline


    Stock Market players are divided into two categories: Traders and Investors. And within each category, there are subcategories like passive or active investors, day or swing traders, and the list goes on.


    You need to choose which field you are going to play. As you gain experience, you can then try the other disciplines.



    Think Long-Term


    Time is your greatest weapon when it comes to investments. The longer you park the investment, the higher it appreciates. This is true if you did your research and chose the ideal stock to go long-term.


    The Stock Market fluctuates a lot in the Short-Term, but it always trends upward in the long term. Disregard the short-term market noise.


    This is not to say you are not allowed to enjoy short-term gains. You can. It all boils down to the stock that you chose for short-term trading and long-term investing.



    Timing Is Everything


    If you did your research, you will be able to enter and exit the market before everything goes up or goes down.


    You need to feel the market sentiment. Be it an uptrend or downtrend. There is only one way of doing it. It is through the news.


    Utilize Social Media to listen to this chatter, but be wary of hypes, as this is not the dependable market sentiment.


    This is just a way to lure retail investors so that big whales can profit.


    Filter news carefully.


    Also, part of timing is stepping aside and let things happen. What do I mean by this?


    For example, the stock you wanted to buy has already flown to the moon. Don't be a FOMO (Fear of Missing Out) and force yourself to buy the stock. And end up regretting it later because the stock bottomed.


    1. Enter - if the market direction is up
    2. Exit - if the market direction is down
    3. Step Aside - if you're not sure where the market is going.


    The second and third steps are hard to follow because your emotions will have a way of affecting your judgment.


    It is pretty understandable, especially if your portfolio is 50% down. It will be difficult to cut your losses and move on, but you need to be steadfast to survive in the Stock Market.


    Read This Article: In order to recover your investment's initial value, you need to GAIN 100.00% to break even from a 50% investment LOSS.



    Closing Thoughts


    With all the information you can gather about the market, all the suggestions of others. In the end, you will still be the decision-maker.


    Make sure that your decisions align with the foundations below:


    • Have a plan
    • Find your why
    • Choose a field of discipline
    • Long-term and Short-term focus
    • Know when to enter, exit, and wait


    Always consider the above points before you make your investment decisions. Going into the Stock Market without these foundations is a sure-fire way of losing your money.






    The 7 Laws of Stock Market Success



    What you should do today


    What are the rules that you follow on your Stock Market journey? Help your fellow investor/trader by sharing your perspective in the comments below.


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    "You get recessions, you have stock market declines. If you don’t understand that’s going to happen, then you’re not ready, you won’t do well in the markets."
    - Peter Lynch
    - The Introvert's Perspective by ÆlfRæd (ElfCounsel)
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