In a stock portfolio, large companies in mature industries provide typically provide earnings growth and steady cash flows. With a low beta, these companies also help in creation of a defensive portfolio. However, the objective of creating a diversified portfolio is to beat the index returns. It makes sense to invest in the index if investors can’t beat the index.It is likely to be a difficult task to beat the index without having medium and small size companies in the portfolio

• Learning how to invest doesn’t have to be hard. In fact, it can be simple. Regardless of the current state of the stock market, you should still invest in the market.
• Learn how to find and buy stocks, generate consistent returns, and reduce your risk.

1. Always important to remember that equity markets are huge crowds of people attempting to make money at the expense of others.
2. Be patient with winning trades and aggressively impatient with losing trades by cutting your loser immediately. Cut losses immediately.
3. Making money is more important than being right. The market can stay wrong longer than you can stay solvent. Do what the market is telling you do.
4. Look at charts as a picture of where traders are lining up to buy or sell. Charts are simply where traders are lining up.
5. Before they enter any trade, they know exactly where they will exit for either a gain or a loss. Know where you’re going to exit before you get in.
6. They approach trade number 5 with the same mindset they did on the 4 previous losing trades. Understand that statically chart patterns do not always work.
7. Use naked charts and focus on zones. Successful traders rarely use anything but price.
8. They realized a long time ago that being uncomfortable is okay. You have to be comfortable being uncomfortable. Will never have 100% complete information. They’re able to make decisions based on incomplete information.
9. The markets are their workplace. They are a participant, not an on-looker.
10. Stop trying to pick tops and bottoms. Trade when charts are trending. Trade with the trend.
11. Stop thinking about the market or stock as being “cheap” or “expensive”. Is someone going to pay more or less for the stock at a later date.
12. Buy higher highs and sell lower lows. Trade the trends. Things that are going higher tend to go higher. Things are going lower tend to go lower.

1. Change your plan as market change. Be willing to change sides if the market tells them to do so. Wait to see what the market is going to do and trade the trend.

1. Trade aggressively when trading is going well and modestly when trades are going badly. If I have three losing trades in a stock in a row, I will reduce trading size on that stock.
2. They realize the market will be open again tomorrow. They do not succumb too the fear of missing out. Don’t beat yourself up.
3. Never add to a losing trade. Never, ever add to a losing trade.
4. Cash is the goal, but never the measure of success. The goal should be did you follow your rules getting into trades and getting out of trades.
5. They read books about mobs and riots.
6. Provide liquidity to the markets while watching price and volume. Treat trading as a market maker.
7. They have a way to gauge fear, greed and speed of the markets: use Tick Charts 233, 612.
8. They practice reading the right side of the chart, not the left. Become better at seeing, predicting and reading the patterns before they’re formed.
9. Every wealthy trader has an “edge” that can explain to their mothers. As simple as a moving average crossing over another moving average.
10. Businessman Risk. Avoid risking more than 2% on any trade. Position size is calculated exactly on risk tolerance. The objective amount they will risk, or willing to lose, on any one trade. An objective way to calculate risk.
11. Profit targets are based on average range or something objective. Know the normal behavior of a stock before you trade it.
12. One or two trades a month, make their month. Have many more small losers interspersed with big winners
13. Confidence decision makers in the face of incomplete information.
14. A losing trade does not mean you are a loser. Successful traders do not take the market or a stock loss personally.
15. They buy higher highs and sell lower lows.
16. Their business isn’t trading — it’s finding the right trades to make money.
17. They write down or record every trade — price, thoughts, news, attitudes. Find patterns in your own behaviors.
18. Their conviction pa an active trade remains unless something major changes.
19. A winning trade does not result in taking on extra risk the next trade.
20. Trade the reaction, not the news. Trade the aversion back to the mean. Don’t trade the initial reaction, trade the reaction to the initial reaction to the news.
21. Make trading as objective as possible.
22. Keep a journal: Price entry and exit, slippage, max profit, max loss,
23. Learn as much as you can about trading by reading, listening to experts and seminars. Keep a degree of healthy skepticism.
24. Do not get greedy and rush to trade. Take your time to learn how to trade.
25. Develop a method to analyze the markets. Markets keep changing. Need different tools for Bull, Bear and transitional markets.
26. First goal must be long term survival. Second goal is steady growth of capital. Third goal is making high profits.
27. Trader is weakest leak in any trading system. Winner think, feel and believe differently. To be a winner, you must change your personality.
28. Mass Psychology: Bulls are buyers, bets on a rally and profits from a rise in prices. Bears are sellers, bets on falling markets and profits fall in prices . Hogs are greedy. Sheep are passive followers.
29. Ask is what a seller asks to sell. Bid is what a buyer offers to pay. Sellers sell because they expect prices to fall. Buyers buy because they expect prices to rise. Undecided