Hey guys, today I would like to share with you my own rules of trading that I crystallize during the last three years of almost everyday trading. I hope it will help some of you not to repeat my own mistakes. I was trading eve day so most probably these rules will not be so relevant for strategic long-term investors. And please remember – it is my rules, it works for me, and it is not an instruction on what to do in your particular situation.
I join the stock market in April 2020 when COVID-19 and working from home were the new normal (I can feel how some of you missed that time). The decision was made based on a self-development plan that I`ve designed for myself while working from home.
I am working in the financial industry but not related to stock markets etc. Of course, I understood the processes in Global Economy and was aware of trends and forecasts but it was not my bread and butter. So, the decision to invest was made on a kind of `why not basis.
I briefly checked all options that many providers were offering me, my choice was Interactive Brokers (IBKR), their application has the friendly interface, logic, and overall fee level that IBRK offers to micro investors are very attractive compared to their competitors.
Opening an account in IBKR took less than a month, and my first transfer for 5K was completed so everything was ready for me to start.
I was carefully checking the watch list of stocks I was planning to invest in, every day for a month while was waiting for the account to be open.
So, the first rule – focus on something close to your mind/heart or mission and call it however you want. This means if you are passionate about pharmacy and you are following the trends there – you should follow what you like. It would be easy for you to track even minor changes. Yes, I will not tell you that believe me, after investing a serious amount in any company you`ll become a pro in this area, but this will come to you later…
The second rule – diversify your investments. My mistake was to think that investment into Google, Amazon, and Netflix was diversification means. But after the crash of the tech cluster, I realized how wrong was that impression. When all tech went down – some of my friends still make their money on pharmaceutical leaders.
The third rule – is don’t think this will last forever. When I made a $20K profit in a month – I was seriously thinking to make trading my main business. And I swear to God – before Sep-Oct 2021 I can easily believe in this. The situation changes drastically and if I was 100% dependent on stock trading, I would have to look for a new revenue stream. So, my advice – take it easy, don’t go All-in, and play your game wisely – everything could change over the night and this night should not shape your future.
Rule number four – Don’t drink and Trade. Yes, I mean even a glass of wine or one bottle of beer. Don’t. Now mobile phones occupied our time and gave us the freedom to do what we want at any point in time and place. So, when it is Friday night, you are in Bar with your friends and somehow you`ve opened your phone just to check the current status of your position – the best you can do – is to switch it off. It is simple – after even a small dose of alcohol your natural barriers are getting low and this is not the best time to invest – believe me. Just spend time with your friends and you would never ask yourself how? What triggers you to trade this order yesterday?
More to come, stay tuned!