13 lessons for retail folks

by TwoFlakesTooCheap

During my time at one of the startups I made a similar sheet and hung it on my door. It was fun conversation starter.

I hope people enjoy this.

1.       Have patience. Buy Good stocks at cheap prices.

2.       Understand Risk vs. Reward. Bonds, ETF/MTF, S&P500, Large Cap, Mid Cap, Small Cap, Penny stock, OTC. As you go up this list, the risk goes up. Choose your level wisely because this is not a video game!

3.       Edge. There are way smarter people in the market. Find an edge and stick to it. No one can master everything.

4.       Market is the king, then comes sector, then comes individual stock.

5.       Trap. Something seems too good to be true, then it is a trap.

6.       Don’t catch a falling knife. Let it fall, settle, and then buy once it changes direction and rises a bit amount. Watch various indicators.

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8.       Don’t buy a stock based on forums/analyst/tv show etc. Either they have no idea, or they got skin in the game. If you like something you see, double check all the facts and make your own decision. Due Diligence.

9.       Fundamentals. Learn the fundamentals. Don’t buy hot wheels for the price of a real car! Especially applicable to hot stocks/sectors

10.   Learn to do Technical Analysis. What goes up might come down.

11.   Algo, Daytrader, Swing trader, Investor. Decide what you are. Don’t be the day trader who holds the stock because realized loss is too high!

12.   Math. Check the most basic math because it is easiest to miss.

13.   Risk Management and Stop Loss. Use it. Small bags are easier to carry.

14.   Options/Margin. You can leverage the hell out of them so be careful as levers work both ways.

Retail investors/traders are little fish in a big ocean. Take small bites or small positions, diversify, and don’t get eaten up by big fish. Especially true for stocks with small market cap.

For entertainment/discussion purpose, not a financial advice.

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