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The Rules of Investing – A Few Things to Keep in Mind

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The Rules of Investing

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As a young individual, you’re probably looking at various avenues that may boost your current financial position or allow you to make some serious money with the little you’ve invested. Even though this is absolutely possible, there are a few tricks of the trait you should always keep in mind. These guidelines may help you maintain a level head when you start to make decisions out of emotion instead of logic and save you tons of heartache if things go sideways after that. That said, here are some standard “rules” of investing you should never forget once you’ve dived into the world of stock, forex trading or other markets.

Rule #1 - Don't get greedy

This is probably the most important rule of all, and any big-time investor would advise you that greed will probably be your downfall if you should ever allow it to control you. To prevent yourself from getting greedy when trading currencies or buying and selling stocks, set realistic goals beforehand and stick by them. This may seem almost impossible, especially if you’ve hit your target and you “just have a feeling” that it’s going to keep going upward. Then, instead of selling, you end up staying in and watching that little line crash into the abyss, taking all your money with it. Instead, stick with reason and take small profits when needed, rather than risking it all on a whim, because Murphy’s Law always has a way of keeping your number on speed dial.

Rule #2 - Never stop learning

The key to always staying ahead of the curve is by continuously educating yourself on the industry and how it works. You may feel after a while that you have this whole Forex or investing thing under control, but constantly learning new information, like what CFDs are or what a candlestick is, will only benefit you in the future and increase your chances of making more significant profits. The secret, therefore, is never to think that you are fully learned on the subject of investing, but rather to see yourself as a student who is continuously climbing the educational ladder on the innermost workings of your investment, whether it be the stock market or Forex.

Rule #3 Use both long- and short term strategies

Investing money for the long haul can sometimes feel frustrating, and you may even wonder if you’ll have the self-control to keep that money where it should be, even if the balance starts to climb ridiculous heights. The benefit of a long-term investment is that it is much less risky than short-term investments that may generate big profits but can disappear in an instant as well. The choice is yours on your game plan, but utilizing both strategies could ensure you stay committed and make usable profits from day one. I am a big fan of long-term investing. If you use a short-term strategy as well, I would recommend taking profits when you can and tuck them away safely in long-term investments.

When it comes to investing, one should always keep a level head and never let emotions drive your decision-making process. And, by adhering to the above guidelines, you’ll be trading safely and securely with as little risk as possible.

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