10: The Essential Rules for Beating the Market

Introduction

So you're interested in the stock market. Who can blame you? Who can possibly ignore the wonderfully dynamic, fast-paced, living, breathing world of buying and selling stocks? It has fascinated me for years. And I assume it intrigues you, too (otherwise, you would not be reading this book).

How excited would you be to consistently make profits in the stock market and to consistently beat the major indexes? What if you could double your net worth every three to four years, only spend a few (very few) hours a week doing it, and keep your downside risk extremely low? If you read this book and follow my 10 Essential Rules for consistent profits in the stock market, you will achieve this lofty goal and completely change your investing life—forever!

The key to making consistent profits in the stock market is having a well-defined set of trading rules and the discipline to follow those rules—in good markets, bad markets, up markets, down markets, or flat markets.

The stock market is an incredible marketplace, where buyers and sellers can almost instantly reach a conclusion where both are convinced that they have each made the better deal. There is an old saying that in every trade there are two geniuses and two idiots. The buyer believes the stock he's buying will move up in price and generate a profit. The seller believes the stock he holds is about to move down in price and will generate a loss. The seller wants out and the buyer wants in. The buyer believes he is the genius. ...