Stock
Discipline
Be patient
- Don’t buy stocks if you need the money in a limited time(within 3 months)
Know your stocks
- history
- how volatile it is, whether it goes up/down a lot suddenly in the past
- news
Know the trending
- whether shorting or buying
- market is volatile or going up/down
- political
Diversity
- Don’t put all eggs in one basket
- Don’t put more than 1/4 or more than X into any stock
- It’s not diversity if you buy A with 50% of your money, and some other stocks. You put too much bet on one stock.
Don’t invest all your money
- always leave plenty of buffer
- if some stock drop more than 10 percentage, you still have money left to maybe buy more
Be very careful when use margin
- It’s very addictive, you intend to use it (even you know its not the best opportunity, because if you don’t use it, it may be gone)
- Dangerous
- More money, more risk, harder to manage
- Not predictable
- Do’t use it unless its really a good opportunity
How to choose a stock
- Know who are buying/selling the stock
- don’t be the only few who is buying the stock, or someone are selling the stock (a lot), you are the one of the few who is buying it
- the volume, don’t buy stock that’s hard to sell it
- only because the price drops a lot (know why)
Don’t buy the following stocks
- not familiar
- only because others recommend it (do your own research)
- trash company/stock
- the volume is very low
- hard to sell, and it may drop a lot very quickly (manipulate by someone, as only few people are buying it)
- you don’t know why it goes down or up, when it goes up or down, you don’t know how long it will continue
- you will lose the leverage
When to buy
- If a stock goes down, don’t just keep buying, buy it only when it drops down 5 percentage etc
- When you already buy a lot, don’t buy it again when it just drops a little, buy it only when it drops a lot
- Don’t think buy more at a slight lower price to even the cost, and then sell it quickly
When to sell
Case: Sell it with zero gain or small percentage loss
- Don’t hope it will (continue to) go up, then you will sell it when you gain (some or a little) profit, it may not in near term
- Case: When you need sell some stocks (need the money, or you need buy more another stock to cover the loss etc)
How to sell
- Need a plan
- Based on how likely it will continue to go up, and how much it may go up
- Based on how much money in this stock
- Sell by percentage
Critical moment
For some stocks, it only pops up in very limited time, grasp this opportunity and sell it quickly.
Or you need the money urgently.
- Know why it goes up, whether its based on rumor, or really have good news
Plan
If you really need sell some stock at specific time, plan it well
- sleep early, set an alarm so you can get up
- notice the unusual thing (wnw)
Make important decision carefully, seriously and take action
- Take time to think the following questions:
- Do I need money recently
- Should I play extremely safe recently
- Whether to sell (bad macro environment or bad news for the company)
- Should I buy more, when?
- How to sell
Do research before buying or selling
- Check news if some unusual things happen
For new IPO stocks
- be careful before earning dates, lockup expiry
Set limited sell even the stock is currently way below the desired price (for trash stock)
- sometimes/some day, these stock will go up a lot for a short time
Prefer long term invest
- much lower tax 15%, compared with income tax which may be 30% or higher Don’t manage(put) too much money on stock
- Set a limit
Tax Season
Prepare tax as early as possible
-
So you know how much you owe
-
Leave enough more for the tax
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Be very careful to put the money in stock at this time
- Stock may(usually) fall during tax season
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People may sell stock for tax (stock investor)
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Don’t gamble in such short time period, if it fails, it would be difficult to pay the tax.
TODO
Wash-sale
- How to make your loss really count as loss
- Learn to analyze stock graph
- know history, volatility, volume
Apps
Robinhood for trading
Related:
https://lifelongprogrammer.blogspot.com/2009/04/how-to-save-money.html
