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Participating in the stock market isn’t just about buying stocks.

You must also decide how you will handle your portfolio.

With so many options to choose from, it pays to keep things simple.

However, it is a good idea to be well-informed, more so you know what things to avoid.

The best results usually stem from concentration.

Your aim is to have one or two big winners as opposed to many small profits.

Choose a few things you know well and watch them carefully.

Additionally, the more stocks you own, the slower you will be to react. Set a limit to how many stocks you will own and stick to it.

If you have between $20,000 and $200,000 to invest, limit yourself to no more than five carefully chosen stocks. Then, if another tempting stock comes along, get rid of your poorest performing one before buying the new one.

With $5,000 to $20,000, three stocks is a good maximum.

With $3000 of investing capital, a maximum of two stocks.

And if you have more than 200,000, a maximum of seven assets is more than enough.

Spreading your purchases of a stock over time can be a form of diversification.

During a bull market, make your initial purchase, and then follow-up with one or two smaller purchases once they have advanced 2% from your initial buy point.

Make sure you don’t get in too late though. Once it has advanced over 3%, stop buying.

Whether you hold a stock for a short or long time isn’t a blanket decision.

The important thing is to buy the very best stock at the right time and then sell it at the right time also.

Keep your portfolio clean. It should never have losses for more than six or or months.

There are many trading strategies, most of which you should steer clear of. Here are some things to avoid:

• Day trading
• Margins
• Short selling
• Options
• IPOs
• Convertible bonds
• Municipal bonds and other ‘tax-free’ securities
• Income stocks (high dividend yields)
• Warrants
• Merger candidates
• Penny stocks
• Futures
• Gold, silver, or diamonds

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