10 Golden Rules for Success in Stock Trading - A Guide to Effective Stock Investment

Entering the world of stock trading is not easy, especially if you lack experience. However, with the right principles, you can build a strong and stable profitable portfolio. Below is a guide on how to invest in stocks through 10 principles that professional traders always follow.

Identifying the Right Investment Strategy for Yourself

First, you need to understand that there are two main methods of stock trading:

Short-term trading based on technical analysis, involving continuous buying and selling to capitalize on intraday price fluctuations. This approach requires deep knowledge of chart patterns, technical indicators, and constant market monitoring.

Long-term holding focuses on fundamental analysis of companies, selecting businesses with sustainable growth potential. You will need to carefully read financial reports, business strategies, and industry outlooks.

A guide to stock investing begins with clearly identifying which method suits you, then establishing a specific trading strategy and adhering to it disciplinedly.

Diversify Your Portfolio - The Key to Asset Protection

This principle is not new but extremely important. Warren Buffett, one of the legendary investors, always emphasizes the importance of risk diversification.

Diversify your investment portfolio by:

• Buying multiple stocks across different sectors
• Combining stocks with other assets like cryptocurrencies, forex, commodities
• Investing in stock indices (S&P 500, VN30, etc.) instead of individual stocks

These indices include a basket of many companies, helping to minimize losses during market downturns. During growth periods, a single stock may surge more, but with a reasonable investment approach, index investing still offers stable and safer returns than savings accounts.

Choosing Quality Brokerage Firms

If you follow the long-term holding method, selecting the right company is a crucial decision. Look for businesses with characteristics such as:

◆ Healthy finances: Short-term liquidity ratio (Current assets / Short-term liabilities) ≥ 1.5 indicates good payment ability

◆ Sustainable growth: Revenue and profit growth over the past 5 years (excluding periods of economic downturns)

◆ High profitability: Increasing profit margins, ROE (Return on equity), ROA (Return on assets) annually

◆ Regular dividends: Reflects the company’s confidence in the future

◆ Reputable management: Companies like Vinamilk, Hòa Phát, Vicostone have experienced significant appreciation over 10 years not by chance—they have talented managers who are continuously recognized

High-quality companies usually do not surge rapidly during hot markets but serve as good assets to protect during downturns.

Adjust Your Portfolio According to Market Trends

The world is constantly changing, and so are user needs. Even long-term investors need to periodically review and adjust their allocations.

For example: When the COVID-19 pandemic broke out, central banks loosened monetary policy and cut interest rates. This made borrowing cheaper, boosting real estate demand. Real estate stocks easily increased in value.

However, in early 2022, policies changed—banks began restricting real estate loans to curb inflation. As demand decreased, real estate companies saw lower revenues, and investors adjusted stock prices downward. Smart investors reduced their holdings in real estate stocks at this time.

Warren Buffett is famous for long-term investing, but if you follow Berkshire Hathaway’s portfolio, you’ll see stock allocations change continuously each reporting period. That’s the secret: knowing how to hold with the right proportion, not just holding for a long time.

Risk Management - Capital Preservation as Top Priority

When trading, especially short-term, risk control determines success or failure. Use stop orders to protect assets:

Sell Stop (Sell Stop): Automatically sell stocks when the price drops to a predetermined level. When the stock price falls 10-15% from your entry point, this order triggers to exit before heavy losses.

Buy Stop (Buy Stop): Automatically buy when the price reaches a set level, often used to participate in upward trends.

Setting reasonable stop points helps you control losses, ensuring you can continue trading and learn from mistakes.

Timing Your Entry and Exit Points

Experienced traders use technical analysis to find optimal buy and sell points. The two most widely used indicators are:

RSI (Relative Strength Index): Measures the strength or weakness of price movements. When RSI < 30, stocks are oversold (potential buy). When RSI > 70, stocks are near overbought (consider selling).

Stochastic Indicator: Identifies reversal signals. If Stochastic > 80, the market is overbought and likely to decline. If < 20, oversold and likely to rise.

If you are just starting out, learn these indicators gradually. Technical analysis knowledge is the foundation for effective stock investment strategies.

Catching Market Bottoms - Opportunities and Risks

Timing the bottom of stock prices can yield extraordinary profits but is also extremely risky. Signs indicating a bottom:

◆ Prices continuously make new lows, but momentum indicators (RSI, Stochastic) rise—showing selling pressure is weakening

◆ Prices start forming higher lows compared to previous lows—selling pressure has eased

◆ Large trading volume appears during declines—investors are returning to catch the bottom

Warning: Only invest small amounts when trying to catch the bottom; do not risk all your assets. Avoid bottom-fishing in speculative stocks or stocks in free fall, as they can fall even deeper than you expect.

Do Not Borrow to Invest - Lessons from the Market

Borrowing money to invest is one of the biggest mistakes. You should only invest with money you are willing to lose without affecting your daily life.

Currently, many unofficial trading apps offer “investment loans” with interest rates up to 1000% per month—this is a clear trap.

Instead, you can use reasonable (margin trading): With margin, you can control assets many times larger than your capital. The advantage is that maximum losses are limited to your initial funds—you won’t go into debt. If your trades go well, you can generate high returns.

Continuous Practice - The Path to Success

Warren Buffett shares a secret: Never losing money is the golden rule. To achieve this, you need to:

• Continuously learn investment theories
• Analyze different stocks
• Practice trading gradually with small amounts
• Record transactions and mistakes to learn lessons

The best way is to practice with a demo account, where you can hone your skills without risking real money. This helps you accumulate experience gradually before investing real capital.

Emotional Control - The Decisive Factor

The stock market is highly volatile. A position that is in profit can turn into a loss in just a few days. During such times, you should:

• Stay calm and analyze the reasons for volatility
• Avoid panic selling
• Remember that many regrets come from selling too hastily
• Follow your pre-set trading plan

Stable psychology often determines who succeeds and who fails in trading.

Conclusion

A successful stock investment guide is not about secret tricks but about discipline, patience, and emotional management. Start with basic principles, build experience gradually, and you will find your own path in the stock market. Long-term investing requires commitment, but the results will be worth your effort.