Every investor needs a self created list of rules to invest by so that they stay disciplined and successful. Many investors learn the hard way what the dos and dont’s of the stock market are, but fail to write them down so that they dont repeat these mistakes over the course of their investing career. You need to make a list of rules to invest by yourself, and this article will show you how to do that.

But before we get into the process of creating a list of rules, you may be asking yourself why do I need to make the list on my own?. No, its not because Im too lazy to give you a specific rule list, its because each investor has their own strategies, goals, and styles that make them different. So a list of rules that might work for one investor might be terrible for another. With a list of rules to invest by created by yourself, you can use your own experience to identify what works and doesnt work for you. If you have no experience in the stock market, scroll down to the section titled My own rules to see my personal set of rules for investing to give yourself an idea of where to start when creating your rules.

Creating Your List of Investing Rules

Creating the Dos

Think of all the investments you made this year that were both rational and successful. What similarities did these investments have in common? Try to isolate these similarities and find ways that they can be made into rules. For example, if you made several investments in stocks with good fundamentals and they were all successful, a good rule to create would be only invest in stocks with good fundamentals. Your list of Dos should consist of rules that will always be a good foundation for choosing stocks to invest in.

Creating the Dont’s

Now think of all the investments you made this year that were unsuccessful and/or irrational. Think about what made these stocks poor investment choices and what was ultimately wrong with them. As an example, suppose you invested in a stock just because you heard about it from some market analyst on television and invested solely by that analysts advice. So your rule would be to never invest by analyst opinion alone. Opposite to the list of Dos, your Dont’s list should consist of rules that contain all of the wrong reasons to invest in stock.

Remember . You dont need a list of investing rules that is longer than most fictional novels. Keep it simple and stick to the universal rules that will make you a successful and rational investor.

My Own Rules

Do

1. Invest in stocks with strong fundamentals
2. Stay up to date with the stock market on a daily basis
3. Do research on a stock before buying/shorting it
4. Diversify your portfolio
5. Sell some shares on a high performing stock that may have peaked
6. Stay unemotional under all circumstances

Dont

1. Go by your gut feeling
2. Let momentum be the only reason for investing
3. Attempt to trade market volatility
4. Rely on analysts opinion alone
5. Let the fear of failure become an obstacle

Oh, and the golden rule for investing: Buy low, sell high.