Have you heard about CAN SLIM method? If yes, you probably had read the book ‘How to Make Money in Stocks’ (one of the books in my recommended list). If not, here are some general investment rules that I learned from Investor’s Business Daily (IBD)

• Consider buying stocks with each of the last three years’ earning up 25%, return on equity of 17% and recently earnings and sales accelerating
• Recently quarterly earnings and sales should be up 25% or more
• Avoid buying cheap stocks
• Learn how to use charts to see buying points
• Cut every loss when it’s 8% below your cost (I believe different people have different risk level; some may set this figure higher, some lower). Make no exceptions so you can always avoid huge losses. Never average down in price
• Follow selling rules on when to sell and take profit on the way up
• Buy when market indexes are in an uptrend. Reduce investments and raise cash when general market indexes show five or more days of volume distribution
• Pick companies with management ownership of stock
• Select stocks with increasing institutional sponsorship in recent quarters
• Current quarterly after-tax profit margins should be improving, near their peak and among the best in the stock’s industry
• Don’t buy because of dividends or P-E ratios
• Pick companies with a superior new product or service
• Don’t try to bottom guess or buy on the way down. Never argue with the market. Forget your pride and ego
• Find out if the market currently favors big-cap or small-cap stocks
• Do a post-analysis of all your buys and sells. (I suggest you keep a trading report for all your trades). Post on charts where you bought and sold each stock. Evaluate and develop rules to correct your major past mistakes