DISCLAIMER
I’m not a certified financial planner/adviser nor a certified financial analyst. This is just my opinion and nothing more.
RULE # 1:
Think of investing like throwing money away. Once you can do that, you can truly start investing like a pro. This is because once you get into the mindset that you can't touch your money anymore, you are more likely to invest without your emotions.
RULE # 2:
HAVE A PLAN AND FOLLOW THROUGH WITH IT. I know this sounds simple, but I can't remember how many trades I have to make before I realized how important this rule is to me. First i try to figure out if i am investing for the long term or short term. Next I try to figure out how much I am willing to invest in a stock/crypto. Once I find that out what I am willing to risk. I set multiple stop lose price and set multiple target price. One of my favorite saying is " Bears make money, Bulls make money, pigs get slaughtered." In simple terms DON'T BE GREEDY. There was so many times when my stop lost was hit but i refused to sell because I had faith in the company or I would dump more capital into the investment. However, most times, If I had just sold, I would have cut my loses and invest back in at a cheaper price later on.
RULE# 3
TAKE PROFITS. There is nothing better than waking up in the morning and see how your investment has doubled over night. The only thing better is when your investment is up 500% in 1 week. That was my best week ever. I could't sleep most nights because I had such an euphoric high. I was so caught up that I almost forgot to follow one of the most basic rules in investing. " WHAT GOES UP, MUST COME DOWN". let me show you.
The stages of a bull market chart is one of my favorite charts ever. This is because it's such a simple chart and it works every time. Like most people, when BTC dropped from the all time high of $20,000 to $11,000, I died a little inside. Months of profits was lost in less than 1 week. I was devastated. I thought to myself, I should just hold until it comes around again but then i remember the chart above. I decided to put my emotions aside and just follow the chart. When it hit $17,000 again. I thought about keeping it again and see how far I can take it. Good thing I came to my sense and decided to follow the chart. within a month, BTC dropped all the way down to 10k. If I had decided to stay in, I would have wiped out any profits I ever made. It's a shitty when you left too early in the game but an even worst feeling is when you start losing money because you were too greedy. Which brings me to my next rule.
RULE # 4
If you're not sure whether to take profit or not. Just sell a portion of your investment to secure some profit and leave the rest. PROFIT IS PROFIT.
RULE #5
There is always an opportunities to make money. If you're not comfortable with the price, then wait until you are. Never buy/sell on FUD or FOMO. This is where I got destroyed when i first started trading. To be honest, I still am sometimes. Most great traders buy the rumor and sell the news. If you're buying something because news just came out about it, you're already too late. When you're buying based on the news, you're buying premium price for something someone paid a bargain for.
RULE# 6
NEVER GO ALL IN. I still hate myself for not following this rule sometimes. By going all in, I limit my buying power to the price I paid for it. Where as if i had saved some capital on the side, once it does drop to a certain point, I can re enter the game at a much lower price thus making my average cost cheaper.
EX: If i have $1000 and i decided to buy xyz stock at $2 per share. I can only buy 500 shares of xyz. Now it drops down to $1.5, my original $1000 is now only worth $750. The only way for me to get back my original investment is to wait till it goes back up to $2. Even then I am only breaking even. However, If i decided to invest $500, I would only be able to purchase 250 shares. Now it drops to $1.50. I still have $500 to purchase 333 shares at $1.5 a share. Now if it goes up to $2 a share again, I would have a total of 533 shares at $2 each. Which will give me $1066. This is just a simple example and in real life, it is way more complicated.
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Thank you