Rules To Stock Buying

You are probably shocked when I say rules to buying stocks. Do not worry; these are not official rules but more like guidelines. When it comes to buying stocks, anyone can do it. Simply register yourself with a trading platform such as RobinHood or Fidelity and open an account and you can begin buying stocks today.  You can buy and sell at will as long as it is within opening hours (7AM to 3PM – Central Time USA). However, crypto currency can be bought and sold anytime and there is no time restrictions. Robinhood lets you do this freely.

Emotions

When you are buying stocks, you need to get emotion out of it. It is ok to buy stocks in companies you like such as Disney, Nintendo, etc. However, do not buy stocks on a whim or in companies that have had a rocky start or last couple of years.  In addition, unless you are going to buy and sell throughout the day to try to make a profit you want to buy a stock and let it sit. Play the long game and relax. If you constantly watch the stock market and panic over every little cent or dollar you lose or gain then it will cause you undo stress. Letting your emotions get the best of you will only cause you more heartache than fun.

Research

Before you buy a stock, you need to do your due diligence. Researching the company, its finances and its long-term stability is crucial. Otherwise, you run the risk of losing some money or in worst-case scenario, all your money. Do not pick a stock at random. You will want to form a plan on what to achieve your financial goals. This will help you pick the right stocks. For myself, my plan is for retirement and dividend stocks. My goal is to have $2k-$3k per month off dividends from the stocks I own. With this in mind, I am picking stocks that pay excellent dividends per month and quarter, solid financial history and making a profit each year.

Trends

Do not buy a stock because it is trending low. Research plays a key here. If a stock is not doing too well, it could be a good opportunity to buy shares, especially if the company will rebound. For example, let us say Amazon goes through a massive lawsuit or some scandal and its stock price drops dramatically. A company like Amazon will bounce back after, everyone in the world uses Amazon so I don’t see a lawsuit or scandal killing the company. Buying on a downtrend is beneficial for you because when the stock bounces back you will have made a good profit.  Now, let us a mom and pop shop that went public a few years ago is having a scandal or lawsuit, chances are the company might not survive due to financial reasons. Buying on a downtrend with that company would not make sense and would actually hurt you financially if the company fails.  Keep this in mind when buying stocks in a downtrend.