I wrote “Trends Develop and We Follow” recently for the sole purpose of getting back to the basics of building a disciplined strategy for managing money. Too often as investors we get sidetracked with all the software, back-testing and holy grail investment philosophies and we forget the simple basics of money management. There is nothing wrong with learning new strategies for finding stocks. But, when we get off track and lose focus on the ‘why’ of investing, the ‘how’ tends to take over and we lose our way.

Here are some simple guidelines for managing your strategies and money:

1. Create your ‘why’ before you focus on the ‘how’.
2. Develop a system to follow. This will keep you on track and focused on your goals.
3. Risk management is money management. Don’t be exposed to unbalanced risk.
4. Establish a plan for your overall portfolio and work your plan.
5. Have and established plan for each position in your portfolio. Entry, Exit and Target.
6. Cut your losses. Risk management 101.
7. Let your profits run. Money management 101.
8. Be willing to play both side of the market – short and long.
9. The market has no feeling, nor does it care about yours. Manage your emotions.
10. Know your trading personality. Don’t go against it or you invite negative emotions.
11. Break-even is not an investment strategy – SELL IT!
12. Never add to a losing position! If you are wrong, admit it and move on.
13. Have a planned exit strategy for every position. Adjust to let your profits run.
14. You manage money, not markets. Don’t forget #9.
15. Greed is the downfall to profit and money management. “Greed Kills”

Each of these principles have a profound impact on your results. The challenge as an investor is the ability remain humble, follow your rules and be disciplined every day. Learn who you are as an investor, define your strategy around your discovery, be patient and keep it simple, so simple you can do it every day of your investing life.