On the following pages I will introduce you to my ten golden trading rules for successful investing. These are suitable for both active traders and investors who rarely trade on the stock market.
With the ten golden rules for successful investing you have a solid foundation for long-term success to be successful on the stock market. With that you can do the same as me and build your fortune with stocks.
10 rules for more successful investing in the stock market
If you want to be successful on the markets, you have to keep a few things in mind.
With the right attitude, the necessary discipline and the ten golden rules, you can make a lot of money on the capital markets, whether in the short or long term.
In addition, at the end of this special report you will find four valuable recommendations to improve your quality of life.
I hope you find many exciting insights when reading my special report.
These principles can multiply your money !
Maybe you know Gordon Gekko. Almost every trader today still knows the infamous stock market trader from the Hollywood film “Wall Street”. Juggle millions, react to market movements and make a lot of money. Michael Douglas achieved all of this in an impressive way in this classic film in 1987.
In reality it’s not that easy. And you don’t have to trade stocks for hours or minutes every day to make money.
But regardless of whether you want to trade like Gordon Gekko or prefer a calmer approach: If you want to be successful on the stock market, there are a few things you have to keep in mind!
With the right attitude, good preparation and the necessary knowledge, it is definitely possible to make money with trading, be it as a passive side income, for long-term wealth creation, for retirement security or even as a main source of income.
On the following pages I will therefore introduce you to my “10 golden trading rules” for successful investing. This gives you the perfect toolbox to be successful on the stock market. I have been consistently implementing these rules myself for years. For me, they are a solid foundation for building long-term wealth on the stock market.
1. ACQUIRE A GOOD KNOWLEDGE OF THE MARKET
Get ready for the stock market! To be successful as a trader, you absolutely need to be familiar with the markets and how they work.
You should know what influencing factors there are, how you react to events and how you benefit from them. Do what I do: Spend part of your day reading news, analysis and other opinions. The stock market is made not only of hard economic issues, but also of politics and social issues.
Build your own little trading world. Focus on a trading strategy or specific market. Become a professional in your field. Trading is almost like in normal life. The more specialized a worker is, the better it is. Another advantage is that you don’t overwhelm yourself. Don’t claim to know everything. Otherwise you will no longer be able to focus on what is important.
2. USE THE CHART ANALYSIS
Many traders use chart analysis to optimize entry and exit times and to recognize trends. A big advantage of the chart technique is that decisions based on it are free of emotions and feelings: when a certain line is broken, a predetermined action is carried out. Therefore, you should have at least a basic understanding of charts and chart formations.
Look at as many charts as possible. Soon you will see trends andRecognize patterns, such as an upward trend. Prices always move in waves and cycles, both on a short and long timeline. The chart technique is also often used by day traders who speculate on extremely short-term profits. A position is often liquidated after just a few minutes. The principle here is almost always the same: recognize a trend, go along with it and then exit again. Or a trend change, i.e. recognizing a turning point when an uptrend turns into a downtrend. A position is then opened or closed at these turning points.
For me too, chart reading is an important tool that I use for my investment decisions. Because I generally only buy stocks that follow a long-term upward trend, then consolidate and then return to their former strength. This is my trend following strategy that I have been successfully implementing for years. I read the long-term development from the charts and make my decisions based on that.
3. LIMIT LOSSES
A very important part of my investment strategy is also to limit losses to do successful investing. Nobody always has direct hits and price rockets in their portfolio. What was once classified as a purebred competition horse sometimes later turns out to be a lame horse.
Meanwhile, many private investors keep making the same mistake: selling a stock too late or not at all, even if the losses keep getting bigger. This certainly has a lot to do with psychology: no investor likes to admit a mistake or realize losses. This is completely human.
Nevertheless, it is a sensible strategy to consistently separate yourself from price declines in order to limit losses.
Because a loss of 100 euros can happen quickly 200 euros and suddenly you lose 1,000 euros.
Certainly there are always Situations in which a sale turns out to be a mistake because a stock turns up again. But you shouldn’t be upset about this. That’s part of it. It is more important that you stay true to your strategy and protect your portfolio from serious losses that can occur if you do not pull the ripcord in time.
So when you buy a share, think about the loss at which you will be able to part with it again. If the maximum risk is exceeded, be consistent and sell the security. I also always set a “red line” in my investments, where I separate from an investment if it falls below it. This is the only way to manage risk and the portfolio sensibly.
4. LET PROFITS RUN
Just as important as limiting losses is letting profits run. According to my many years of experience, the trend following strategy on the stock market brings you the biggest achievements. It is extremely important not to get out too early. Many investors take a profit too quickly for fear of losing it again. But the stocks I buy all have the potential to rise over a very long period of time and achieve returns of several hundred percent, in rare cases even over +1,000%. My portfolios almost only contain stocks that are in a long-term upward trend.
Anyone who says goodbye to these stocks too early and realizes profits is often annoyed later. If you have the right papers in your portfolio, you can let your profits run and sleep much more relaxed. That’s why I set an initial price target when I buy a stock. If it is reached, it will be raised further as long as the trend continues.
5. DON’T CHASE AFTER ANY STOCK
“You should never run after a tram and a share,” is certainly one of the best-known stock market wisdom from the old master André Kostolany. And that’s exactly the approach I follow. If you missed the entry and a share runs away from you, please hold on the nerves. The train may continue a few stops further. But it is not uncommon for it to happen exactly then that the train moves back again, and therefore in the wrong direction.
In many cases, price rockets that rise suddenly and quickly are already overvalued. With each further increase, the likelihood of a massive pullback increases. Such stocks are also driven by investors who don’t have good nerves and get in anyway. This often creates a short-term upward spiral and often a bubble. But sooner or later these bubbles almost always burst.
So stay cool and wait for new entry opportunities. Either with your object of desire or with another stock. One of the most important requirements for success on the stock market is patience. In addition, new investment opportunities await you almost every day in the large stock and financial universe. So if you missed a train, wait and take the next one.
Opportunities keep coming on the stock market!
I do it like this myself: If I really want a stock and have missed the entry, I wait until the stock goes through a consolidation lasting several weeks. This happens with every stock sooner or later. When you then gain new strength, the right moment has come to get started.
6. NEVER INVEST AGAINST THE TREND
“The trend is your friend” is not only excellent stock market wisdom, but also an important component of my investment strategy to do successful investing. Only invest in stocks that are in an uptrend or benefiting from a megatrend.
Many investors try to find bargains on the stock market and buy stocks that have fallen for a long time. But it is not uncommon for a stock that has already lost 50% of its value to lose another 50%.
If a stock keeps falling, there is usually a reason. Avoid them to do successful investing.
Therefore, do not grab the falling knife. For your investments, it is better to choose stocks that continue to rise, as is the case with my megatrend stocks. Of course, such stocks can always fall from time to time. But sooner or later the long-term uptrends will continue.
If you have a value on your watchlist and suddenly it goes downhill, please remain calm. After a downward trend, wait for the so-called bottom formation phase. Great values that are on the decline eventually come down to earth. This is often followed by a sideways phase and then the next longer upward movement begins. Only when a stock shows strength again is it a good time to enter.
Countercyclical investing is also a possible trading strategy. Countercyclicals buy a stock when it is very cheap and exit after a sharp rise. From my extensive stock market experience, I can tell you that you need a lot of patience for such strategies. Because even professionals can’t even begin to predict a stock’s high or low. Even a stock that is extremely cheaply valued can still take a while before it starts a new upward trend.
In addition, it is often difficult, especially for less experienced investors, to tell the difference between a stock that is successful in the long term and only corrects temporarily, and a stock that is permanently unsuccessful.
That’s why I think it makes more sense to focus on long-lasting trends and invest in stocks that rise over years or decades.
7. BET ON MEGATREND STOCKS
An important aspect of my strategy is to invest in companies that benefit from a megatrend. A megatrend is a trend that leads to profound and lasting changes in our society, economy or politics and lasts over a very long period of time. These include, for example, areas such as digitalization, climate change, mobility, demographic change, but also extensive changes in the traditional financial world. Large megatrends often lead to other trends that are driven by them or interact with them. Digitalization, for example, includes many other trends that will shape our world of tomorrow, as you can see in the figure.
Companies operating in megatrend industries continually receive tailwind from such developments. They can increase their profits more quickly and therefore the share price can continue to rise.
Companies I buy have a solid business concept, are often market leaders in their field, have established products on the market and have excellent management and motivated employees. This means they can continue to grow for many years, sometimes decades.
8. FIND THE RIGHT TRADING PLATFORM AND BROKER
If you want to trade successfully, you absolutely need a reliable trading platform. Nothing is worse than waiting minutes or sometimes hours for an order confirmation or not having access to the trading platform due to a technical malfunction. In addition to a lot of frustration, this often leads to painful losses.
Test different banks and systems. Many providers offer a free demo account that you can use to try out how it works and how reliable it is.
If you are new to trading, it is best to start with fictitious capital
such a demo account. Only use real money when you are successful with the fictitious capital.
Once you have found a trading platform and are happy with it, then stick with it. Ultimately, it is important that you are familiar with your platform and can trade reliably. Find the system that suits you and study it intensively. Of course, the fees are also not unimportant. Especially for traders who like to trade often, it is important whether a trade costs 5 euros or 10 euros. The equation is very simple: the lower your fees, the higher your profits!
9. HAVE ADEQUATE START-UP CAPITAL
If you want to earn money on the stock market, you should bring enough money with you. With a bit of luck, you can certainly turn 500 euros into 1,000 euros relatively quickly. However, this usually has nothing to do with a professional trading approach that works in the long term.
How much capital is required cannot be said in general terms because it depends on many Factors such as strategy, value securities you want to trade and the financial goals. In order to build a meaningful portfolio, I recommend you have a starting capital of at least 5,000 euros. This allows you to build a well-diversified portfolio, including a capital buffer, so that you can buy again if there is a setback. Of course, this sum can also be larger.
10. EVALUATE RISK ASSESSMENT AND TRADING STRATEGY
Develop your personal trading strategy. How high should my profit be per trade? When does it go into a share and when does it go out again? I too have been doing this for decades. I draw a red line to limit losses and work with price targets. Also document all trades. Keep a trading diary in which you record all purchases and sales.
Analyze what you did right and wrong. Be honest and admit your mistakes. Before you get started, you should think about how much risk you want to take. There is a suitable product on the stock market for every type of investor. As always, the rule of thumb tends to apply: the greater the opportunity, the greater the risk. There are products with high leverage that allow you to quickly double your bet. But such products also lose value very quickly if things don’t go as expected. On the other hand, there are very conservative trading options where the risk is manageable.
Now that you have learned about my ten golden trading rules, I would like to give you four important tips:
The following recommendations have also helped me to trade successfully in the markets over the past decades. They have nothing to do with hard trading facts, but rather aimed at improving your quality of life.
Stay realistic and down to earth
Haughtiness comes before the event. No matter how successful you are, stay on the carpet. Every trader experiences phases when things are going particularly well. The stock market is suddenly a small money printing machine. Everything runs like clockwork and as if by itself. Right now it is particularly important not to take off. Firstly, the stock market is not a one-way street and secondly, mistakes often creep in just when you think that making money on the stock market has become easy.
As soon as traders have the feeling that they can uproot trees, concentration wanes and bad decisions are the order of the day. This suddenly sets off a spiral that is almost impossible to stop. From a series of Winn trades quickly become a painful series of losses.
Develop a time frame and routine
Many traders suffer from burnout sooner or later. It’s very tiring to spend all day dealing with the stock market and your money. Particularly for day traders who trade very short-term positions, a dependency and even an addiction can develop. It is not uncommon for the entire private environment to be put at risk.
Certainly the thought of doing what Gordon Gekko did in the film is tempting “Wall Street.” The trading systems run around the clock, your own life
melts into the stock market, everything revolves around trading and at some point you’ll be a millionaire.
However, the reality is completely different for most people. Trading is strenuous, requires a lot of time and concentration and often nerves of steel. That’s why you have to create space for yourself. Set a starting and ending point. And then go to work at the end of the day.
Think carefully about whether short-term trading is really right for you, or whether you would prefer to pursue medium to long-term approaches. These can be implemented in a much more relaxed manner.
Create financial reserves regularly
If you make good money with trading, you will regularly see your hard work being rewarded. However, your hard-earned money should not be completely wasted immediately. Build up reserves. A buffer for bad times. Trading isn’t just about good days. There are times
in which traders would like to give up everything. Because it’s not uncommon for you to be stuck with high losses and no longer understand the world.
In addition, a reasonable financial cushion increases the ability to act, for example to increase positions, and makes it easier to build up larger assets. The capital investment per trade can be gradually increased and thus a potentially larger profit can be achieved.
“Fit body – fit mind” is an old English saying. Only those who keep their body fit also have a clear mind and can think well. In addition, there is a good and balanced diet. Both play a special role in the life of a trader. Many day traders start the day early, exercise and eat healthily. Get into a routine when it comes to exercise and diet too. Don’t overtax your body and, above all, your mind. Trading requires a high level of concentration and razor-sharp thinking. Only those who keep fit have the best conditions for successful trading.
As you can see, dear readers, you now have the tools you need to trade and invest successfully on the stock exchanges. Apply my Ten Golden Trading Rules. Follow them and you have a solid basis for building long-term wealth.