To succeed in the market you need to have a game plan. Here I set out some simple yet powerful rules to guide you and avoid the major errors most folk make when they first get involved in stock market speculation.

1. Stock Market Trading Rules
Christopher M. Quigley
B.Sc., M.M.I.I. Grad., M.A.
For many the thought of learning how to trade on the stock market from
the comfort of their home or office is a very exciting idea. However
before you do so it is very importaant to realise that if you enter this area
unprepared you are going to lose your capital.
I have set out below a simple set of trading rules to guide the novice.
If you follow this advice your chances of success will improve greatly
and at the very least you will learn how to protect your trading fund.
Rules Of The Trade:
Rule 1. To trade successfully you must develop your own system and
approach. To do this you must work the market out for yourself.
The best way to start this process is to first learn how others before
you mastered this task successfully. Thus become educated,
informed and aware and stay that way.
Rule 2. Never purchase equities at market price; always use a price limit.
Rule 3. Upon entering a position the maximum loss entertained should be
approximately 3%. Thus be prepared to cut your losses early
should the price action go against you.
Rule 4. As the price of the stock rises (or falls if you are short) raise your
stop accordingly, thus allow your winners to run.
Rule 5. Prior to investing in any equity pay particular attention to the
risk reward ratio. The essence of the market is risk and for you to
be profitable in the long run the risk must make sense in terms of
probable and potential returns.

2. Rule 6. Your potential portfolio of stocks chosen by fundamental
analysis should comprise no more than 10/20 stocks.
Know everything there is to know about your listing
including price history, financials, business model,
management and earnings dates. When you become
experienced you can modify the degree of diversification
in favour of focus.
Rule 7. When starting out do not invest more than 10% of your
investment fund until you have proven your ability to
make good investment decisions in real time in the real
market. Ideally you should paper-trade for 3-6 months
before using real money.
Rule 8. Keep a diary for note taking, analysis and review.
Rule 9. The ideal time to trade is the last 1-2 hours of trading.
Rule10. Be consistent in your approach. Discipline will help you
to eliminate emotion from the process and allow
experience, logic and technique to prevail.
Rule 11. Always know the trend of the market and your equities. The trend
is definitely your friend and be aware that in a bull market, in the
main, significant averages will be price supports whereas in a bear
market the averages will be price resistances.
Rule 12. Be patient and learn to realise that if no investment prospect
presents itself very often the best place to be is in cash since the
most important trading rule of all is: PROTECT YOUR
CAPITAL.
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