The big money is not in the buying and selling but in the waiting.

1)Only invest what you are willing to lose

This is known as risk capital. It is basically your left over money after paying for core day-to-day functions such as rent, loan repayments, emergency savings, insurance, bill payments, etc.

2)Decide what type of investor you are (long term/ short term/ intra day/ trend trader).

If your day job takes too much time from your schedule, long term is preferred. If you can spend 1-2 hours per weekday on stock market, then short term/trend is preferred. Only be a full time day trader after quitting your job (with at least 2 years worth of savings)

3)Don't think of markets on weekend:

If you only spend all your time on your job and stocks , you learn nothing else. Use the weekends to relax, hang out with friends/family and learn things outside your usual exposure.

4)Never borrow money to invest:

If your total net worth is 100 for example, your max loss is 100. If you borrow 100 + your usual 100 (200), your max loss is 200. Which means you need to sell other assets to pay the money you borrowed . Sometimes you may need to borrow another 100 (plus interest) to pay that 100 you lost. Overall its not worth it

5)Never short-sell or use financial products lent to you by broker:

If you buy stock, its your asset. If you buy an option, it is your asset. Your max loss will always be the max money invested by you.

Never use products that are lent to you by a broker or third party source as your max losses can exceed your total portfolio. It requires high level of experience in the markets to accurately estimate your risk, which is not recommended by beginners.

6)Be mindful of your portfolio size:

Say your risk capital is 100, and is tied to other stocks. You see a new stock with good indicators. It may be appealing to buy that new stock with money outside your risk capital, but this is where you need to exercise discipline.

Instead of adding new money, sell some of your poor performing stocks to buy your new stock

7)Never FOMO

FOMO = Fear of Missing Out. If you see a stock that is up 30%, don't immediately rush to buy it as it could suddenly drop from the top (unintentional but nice rhyme la). There will always be new opportunities in the markets if you exercise discipline and restraint.

8)Learn technical and fundamental analysis:

Technical analysis tells you the performance of stock with regards to price action. Fundamental analysis tells you what the business's worth is in terms of balance sheet, assets, savings, cash flow, future forecast and project pipeline. Both these factors alone do not determine the future. But a strong understanding of both will help you evaluate stocks better.

9)Learn about macroeconomics and other financial assets

As we saw in point 8, just technical + fundamental analysis doesn't determine price action. Events happening on one country may randomly affects stock price of your country. Events like war, government policy and central bank decisions can increase or decrease stocks overnight.

Even price movements in one asset (for example real estate) can affect price movement elsewhere (2008-2009 stock market crash).

10)Learn about money and central banks

What is money? Where does it come from? Who manages supply of money? What is the role of central banks in an economy? What causes inflation and deflation? What is the impact of interest rate hikes/drops? What is quantitative easing and quantitative tightening?

Learning the answers to some of these questions and how it related to the markets will help you in a similar way to point 9 above as money supply is the fundamental pillar in any arena of finance

11)Learn to take profits and cut losses

If your stock goes from 100 to 105 and you sell, its a profit.

If the same stocks goes from 105 to 300, Never feel that you missed out (refer point 7 again). Profit is profit. Stock market trading is more of a psychological game than technical. If you have a plan, always stick to it. Get in, get out. End of game. There will always be more opportunities in the future.

If stock goes from 100 and you sell at 105, but it goes to 300, you will feel upset for a few minutes and life will go on

But, if the same stock goes from 105 to 60, you will be hateful and upset every day until it goes back to original price. If the stock never returns to original price, you may be discouraged and demotivated to never trade again. Locking your money in a losing trade for a long time is worse than selling at small loss

12)Losing money is part of the game

The Stock market is designed to have someone lose. There is no stock in the world where everyone is happy with profits.

It is like a game of musical chair: There are 100 players, but only 10 chairs.

So when you lose, accept it and move on. It doesn't mean you are an idiot or you made foolish decisions. It just means it was your turn to lose.

If you sincerely followed point 1 about risk capital, you will not feel too bad as its only a small part of your net worth

Cut your losses quickly and put your money elsewhere

13)Cost average your stocks (ideal for long term investors )

If you buy at 100 but stock is now at 80, but if you feel stock will be worth 500-1000 in the next 10-20 years, use a little of your risk capital to buy more at 80. Cost averaging at dips will allow you to get a better return on investment

14) Diversify your portfolio

If you put all your money in oil and oil dips by 30%, you will also be down 30%. Diversify across multiple sectors such as consumer goods, Tech, Pharma, commodities, bonds, real estate, crypto (I won't recommend as I have sold it but its your choice), etc.

Thank you for reading and making it this far. If you didn't read this long or if you just want to remember few lines from this its this: [Use only risk capital, don't borrow to trade and don't buy products where you lose more money than your original investment]