Buying shares in the stock market is one of the best ways to make money. However, it is something that needs to be done wisely and requires patience. These are some rules to remember while investing:

Invest for the long term 

Investing should always be done with a long term view in mind (between three to five years is a good time span). Investing for the long term allows enough time to sway through the volatility that often accompanies the stock market. However, it is also important to keep investing regularly as well. The power of compound growth can only occur over a long period of time. This approach also creates discipline in the investor. 

Stop losses

Stop losses allow you to set a price at which your stock will automatically get sold. E.g. you buy a stock for $10 and set a stop loss at $9, this means you will only ever lose $1 but stand to gain a lot more than $1. All online brokers allow you to set stop losses and it does not cost anything to set them. Stop losses take the risk out of trading as you are setting your maximum loss each time you place a trade. Stop losses break the myth that trading stocks is extremely risky.

Invest regularly in small amounts

Investing should be a way of life - just like exercise - and should be done regularly. Instead of investing a large amount at a time, it is better to invest small amount at regular intervals of time. A monthly investment is a popular option. This helps in neutralizing the effects of volatility in the market, so that you get more shares when the price is low and less shares when the price is high. Over time, the average cost of accumulation of shares levels out. This also creates a sense of discipline. 

Dividends

Companies pay out dividends if you hold their stock. It is their way of splitting their profits with you. Companies will often pay around 2-5% dividends each year meaning if you have $10,000 in a companies stock and they pay a 5% dividend then you will receive $500 for not doing anything, not a bad little earner eh!

Beating recession

Although the recession seems to be coming to an end, if another recession happened you would be able to make money by shorting stock. This is a concept that allows you to make money when stocks are going down. If you can learn how to successfully short stocks then you will never have to be affected by the recession again.

Trading shares from home allows you to adopt a great lifestyle. There is no pressure from bosses and you do not have to deal with other peoples problems meaning you can solely focus on yourself. When trading shares your day can often end early leaving plenty of time to focus on other activities.

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