1. Day trading is for mugs.

Sure, you might make some money occasionally (but even the worse gamblers win sometimes), but, over a long period of time, you'll never beat the equity markets by day trading. Remember, you are in competition with big players who can move markets, and automated trading systems which can be in and out of a stock before you can even think about pressing the 'enter' key. Day trading is not a level-playing field. The deck is heavily stacked against the little guy.

2. Be an investor, not a gambler

Never invest in a stock simply because someone told you it might be a good idea. Always be on the lookout for tips, but do your own due diligence before you invest. Pay attention to some of the stuff on Yahoo and Google Finance message boards, and provided by bloggers and investment websites, but never use this information as a substitute for doing some research yourself. It's boring, it can be hard work, but, in the end, it's the best way to protect (and hopefully enhance) your capital.

3. Be careful chasing a rising stock

Tempting though it is when you see a stock racing away in premarket and after the opening bell, it can often be dangerous to enter the fray then, hoping to ride what looks like a winner and dump it before everyone else does. All too often, you will end up a bagholder, who is then faced with 'dead money' (waiting for a stock recovery which may never come), or selling at a loss.

Don't get us wrong, we see no problem jumping on the bandwagon if, after proper due diligence, you decide that the stock is likely to head north over a long period, but if you are just after a quick buck and want to be out the same day, chasing after a rising stock is invariably asking for trouble. In any case, there will usually be several pullbacks which can be used as entry points.

4. Be greedy when others are fearful

'Be fearful when others are greedy, and greedy when others are fearful' is a maxim made famous by Warren Buffett, and is a creed we now swear by. Now that doesn't mean buying everything that tanks, but, every so often, investors over-react to bad news (a profit miss, an accounting issue, a poor drug trial, etc), and you can pick up a winner - as long as you are patient. Wait until you think the floor is in, make your investment and sit back. It may take months, but well thought-out investments made in the face of investor panic can often pay-off big time.

5. Don't marry a stock

If a stock is not behaving as you thought it would, go back and try to examine why. If you uncover new information which is impacting its behaviour (or something new has emerged since you originally purchased the stock), do not hesitate to cut some, or all, of your position. Have a strict downside risk position policy, and sell if the stock price falls to your exit point.

6. Don't be a slave to technical analysis

There's certainly a place for technical analysis in stock picking, but using the study of past data to predict the future has it's limitations - especially when, like now, we are in relatively unchartered waters. Remember, charts and technicals can't predict events like the emergence of H1N1, September 11th, the fall of Lehman and a raft of other geo-political things that could move markets and impact specific stocks.

7. Market timing

Don't beat yourself up if you didn't enter a stock at a low, and exit at the high. Timing a stock in this way is close to impossible. As a friend once said to us, if you get in a little after the low, and sell a little after the high, you will make a ton of money.

8. Don't spend all your time watching your stock prices

Tempting though it is, don't waste your time checking your stock prices every 5 minutes. Make careful judgements before you invest, and don't second-guess your own decisions. In these volatile times, stock prices can move a lot intra-day, and the sure way to lose your nerve is to constantly be monitoring your positions.

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