The selldown rules

I am not an expert in stock trading and earning money through the stock exchange. In fact, I am still in the learning process and will be in this process for quite some time. Through my trading experience, I have set some rules that seem to work for me, to protect me from impulsive decisions and to somehow maximize profits and minimize losses. These rules are what I have collectively called the selldown rules. Please take note, however, that these rules do not apply for everyone. Each person has his own unique personality to which a unique custom set of rules has to be carefully tailored for.

These are the selldown rules which are bound to change over time:

1. Find a good company to buy, preferably one whose fair value as provided by your broker's research team is significantly higher than the current market price of the company. Preferably, the company should have a good story on how it will be able to make money in the near future.

2. Maximum buying allocation per month is 5% of initial capital. For instance, if you are just starting to trade with an initial capital of 100k, then the maximum purchase you can do for a month is 5000 pesos. The rationale behind this is to avoid impulsive purchases or incorrect purchases which you may deeply regret. You might not like what you get or buy. So don't be greedy and foolish.

3. Take note of the number of months it took you to buy your total number of shares for a certain company. 

4. Wait for the market price of a company to reach near its estimated fair value. You may start selling if the market price is within 10% of its fair value. Don't be greedy in thinking that the market price will continue to go up well past its fair value. That's why it's called fair. Once the market price becomes fair, start selling or else, you might end up not profit anything at all.

3. In selling a company, divide the number of total shares by the number of months used to purchase the total amount of shares. The quotient is the maximum amount of shares that can be sold for the company for a single month. Rationale behind this is that sometimes, fair values given by brokers are upgraded every now and then. If you sell all your shares one time big time, and your broker suddenly announces an upgrade in fair value, then you lose opportunity to maximize your profit.