Here are the top 3 tips for beginners.
1) How to not lose money in the stock market
As outlined in onboarding tip #8, the key to not losing money in the stock market is Warren Buffett’s Rule #1 Investing.
- Rule #1, don’t lose money.
- Rule #2, don’t forget Rule #1.
What this means is you should train a good habit of only selling stocks for a profit.
I made this decision almost 10 years ago. I only buy financially strong stocks (On Sale stocks) and I only sell stocks for a profit.
2) When to Buy
As outlined in onboarding tip #9, buying a stock is a 2-step process.
- When a stock is On Sale or changes to On Sale
- When a stock has a 4M score close to 80 or higher
I typically don’t overcomplicate this. A lot of new investors sit on the sidelines, analyzing and worrying about buying their first stock. I like to remind myself that businesses are in business to solve problems by selling products and services. On Sale means a financially strong stock but a 4M over 80 provides me more confidence on the strength of the overall business.
3) When to Sell
As outlined in onboarding tip #10, selling a stock is a 3-step process.
- When a Summary changes from On Sale to Watch or Overpriced. This tells me the financials are getting weaker.
- When a 4M score drops close to 59 or lower. This tells me the overall business is getting weaker.
- When you make a profit. In other words, I only sell when I make a profit.
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