10 tips to make more money By adhering to these simple yet effective rules you will learn to protect your

capital and increase returns. These rules are especially important with the sharemarket rally like to continue until July or August before the bears return later in the year, says DAL !"LL#A$ from %ealth %ithin. By Dale Gillham from Wealth Within The two most pressing &uestions on investors' minds these days are, have we seen the bottom yet and where is the sharemarket heading over the ne(t )* months+ " will address the second &uestion first but there is certainly no simple answer, foremost because of the continued uncertainty with the ,- economy, which tends to wreak havoc on world markets. That said, there are still opportunities in the market if you know what to look for. "n this article, we consider these opportunities by way of investigating the important do's and don'ts when trading the sharemarket. .rom e(perience, " can honestly say if you follow the rules " suggest, you will not only be able to manage your risk but also be far more profitable. .irst, a review of what is happening in the market. /n present indications " believe the All /rdinaries inde( will continue to rise to a high of around 0*11 points before falling again over one or two weeks near the end of $ay. After that low, the market will again turn bullish and rise to a high of around 0211, with the possibility that it could continue to rise to a year's high of around 2111 in July or August before turning bearish in -eptember. #ow far the market falls in -eptember will determine whether the low of $arch 3 is in fact the bottom of the longer4term bear market. -o what should and shouldn't you be doing to take advantage of the current market conditions+ There are only two things we can control when it comes to the sharemarket 5 when we enter a trade and when we

e(it. That is why it is essential to have a workable trading plan and solid money management rules. These two strategies alone can save you thousands in lost opportunity but there are other things to consider when trading. Here are 10 tips to preserve more capital and make more money: 1. Ignore dollar-cost averaging $any professionals say dollar4cost averaging can reduce the risk of investing in volatile markets and help to avoid the so4called pitfalls associated with timing your entry into and out of the market. The concept involves placing small deposits into a particular investment at regular intervals over a period of time, regardless of whether the market is moving up or down, so as to average the price at which you purchase the asset. "n my opinion, this strategy is flawed because investors sub6ect themselves to higher risks when investing in assets that are falling in value, which has certainly been the case over the past two years. . Don!t "#y cheap small caps $any investors tend to buy shares simply because they perceive them as being cheap. But cheap implies that you will get a bargain. This may be the case when you shop at the supermarket but this mindset is not the best strategy to adopt when investing in the sharemarket. 7ou want to buy &uality, not &uantity, because that is where you will generally receive the greatest gains. $. Don!t "#y and hold Time in the market is probably the most perpetuated myth in the financial planning and managed fund industry. The reason why most of us hear the words 8buy and hold' or 8it is time in the sharemarket that yields returns' is because the industry cannot, or does not want to, time the market. 9onse&uently, the public is cautioned through advertising slogans about the perils of market timing.

But to accept that time in the market is more important than timing the market is probably the greatest downfall of anyone wanting to beat the market average. %. Don!t over #se leverage "n the past, many investors have been attracted by the hype and supposed &uick returns that leveraging can provide, but reality has bitten many in the past ): months with record margin calls being e(perienced. "t is important to understand that leveraging can not only magnify gains but will certainly magnify losses, particularly in a falling market. As a general rule of thumb, if you cannot profitably trade blue4chip shares on a consistent basis, do not attempt to trade other instruments such as 9.Ds, warrants and options. And if you use margin lending, never leverage beyond 21 per cent of your portfolio. &. Don!t "e affected "y the herd mentality $any investors react to market conditions by purchasing shares en masse when markets are rising and selling en masse when markets are falling. #owever, in my e(perience it is far better to take a contrarian view to investing in the sharemarket. This is supported by %arren Buffet, who once said it is better to be fearful when others are greedy and greedy when others are fearful. "n reality, most investors are fearful and greedy at the same time, which often results in an inability to profit from market fluctuations. '. (se stop-loss points to protect capital -uccessfully investing in the sharemarket is not simply about how much you make; rather, it is about how much you do not lose. "n other words it is about minimising risk, not ma(imising profits. A stop4loss is simply a determined price point at which you sell a security to preserve capital if a recently entered trade turns against you, or to protect the profits of a winning trade. This rule alone would have saved investors from losing thousands of dollars over the years.

). B#y only top-*#ality shares The top 21 shares on the Australian market achieved their status for one reason 5 they are the best4performing shares in the market. "t makes sense to stick with a good thing. $any believe, however, that blue chips are slow in generating returns and therefore they prefer to take higher risks investing in 8penny dreadfuls'. "n recent times, investors have bought 8penny dreadfuls' in the hope of recouping their losses over a few years. ,nfortunately, this strategy results in taking higher risks, leading to even greater losses. +. ,l-ays manage yo#r risk The amount people invest in the sharemarket tends to change their perception of the risk being taken and the research re&uired to manage that risk. ,sually this is because it is much easier to swallow a <)111 mistake than a <211,111 mistake. But let me assure you, the process you take to invest <)111 or <211,111 should be e(actly the same, because they both represent the same amount of risk. .. Diversify "#t not too m#ch "t is true that diversification reduces risk, but a portfolio that is over4 diversified =for e(ample, more than )* shares> is e(posed almost e(clusively to market risk, which cannot be eliminated by diversification. A portfolio that is over4diversified will generally mirror the market, which in the past two years has meant losses of up to 21 per cent or more for some investors. A properly diversified portfolio should have somewhere between eight and )* shares. The trick is not to have lots to shares with small amounts invested in each, but rather to have a smaller number of shares with larger amounts invested in each. This lessens the risk and increases the returns. 10. /d#cate yo#rself "gnorance can be very e(pensive. $any who told me in the bull market that they did not need or could not afford to learn have now suffered losses many times greater than if they had gained a solid education. %hen

it comes to the sharemarket, the first investment should always be to educate yourself. /ver the ne(t two years, it is very likely the market will continue to be volatile and only educated investors will profit during this period. By adhering to these simple yet effective rules you will not only protect capital but also increase returns, and in this market nothing is more important. ,"o#t the a#thor Dale !illham is author of #ow to beat the managed funds by *1?, and Director@9hief Analyst of %ealth %ithin. 0rom ,12