Self-Study Stock Investment - 10 Essential Tips for Beginners

Getting into the stock market is not just about textbook knowledge. To self-educate effectively in stock investing, you need to combine theory with practice, continuously monitor the market, and learn from experienced investors. Below are 10 golden principles that anyone aiming for success in stocks should master.

1. Define Your Investment Style

First, clarify your goal: short-term or long-term investing?

Short-term investing relies on daily trading, using strategies based on technical analysis. Short-term traders need to constantly watch charts, stay updated on market news, and adjust positions quickly.

Long-term investing employs buy-and-hold strategies based on fundamental analysis of companies. These investors don’t need to monitor the stock table daily, only periodically check.

Each style requires different skills. Short-term traders must understand technical analysis, momentum indicators, and market psychology. Long-term investors need skills in fundamental analysis, reading financial reports, and identifying promising companies.

Once you choose a style, strictly adhere to your strategy, avoiding impulsive buy/sell decisions driven by emotions.

2. Diversify Your Portfolio – The Asset Protection Formula

This is a principle Warren Buffett and all experienced investors mention. Don’t put all your eggs in one basket.

Diversification can mean:

• Buying many different stocks from various sectors
• Combining stocks, bonds, cryptocurrencies, and forex
• Investing in market indices (S&P 500, VN30…) instead of individual stocks

The benefit of diversification is that during market downturns, losses are limited compared to holding a single stock. Market indices tend to be less volatile than individual stocks.

In a bull market, index investing may not yield as high returns as holding promising companies. But over the long term, this strategy still provides significantly higher returns than bonds or savings accounts.

3. Technical Skills for Selecting Stocks to Hold

If pursuing long-term investing, choosing “good stocks” is a crucial decision. To learn stock investing deeply, you need to analyze:

Characteristics of high-quality stocks:

• Low debt, safe liquidity ratios (above 1.5)
• Revenue and profit growth consistently over the past 5 years
• Profitability ratios, ROE, ROA (improving annually)
• Regular dividends to shareholders
• Reputable management with professional conduct

Leading companies like Vicostone, Vingroup, Vinamilk, Hòa Phát… have proven their strength over 10 years of strong appreciation. These are firms with excellent leadership, large market share, and continuous recognition.

Good stocks may not generate extremely high yields in hot markets but serve as good hedges when the market turns downward.

4. Flexibly Adjust Your Portfolio According to Trends

Even long-term investors need periodic review and adjustment of stock weights.

For example, when COVID-19 broke out, central banks loosened monetary policy and cut interest rates to stimulate the economy. Borrowing became cheaper, real estate demand surged, causing real estate stocks to soar. However, when policies tightened in 2022, demand decreased, and these stocks declined.

Smart investors know how to change portfolio weights when policies or economic trends shift. Buffett exemplifies this: although famous for long-term holding, Berkshire’s portfolio is continuously adjusted.

5. Risk Control – The Lifeline of Trading

For short-term trading, risk management is key. Use stop-loss orders to protect capital:

Sell Stop Order (Sell Stop): Automatically sell stocks when the price drops to a set level, minimizing losses.

Buy Stop Order (Buy Stop): Automatically buy stocks when the price exceeds a predetermined level.

An effective strategy is to set stop points 10-15% away from your entry price. If the market suddenly reverses, you only lose a small part of your capital instead of being wiped out.

6. Determine Entry and Exit Points Using Technical Analysis

Professional traders use technical analysis to find optimal entry and exit points.

RSI (Relative Strength Index): Measures trend strength.

• RSI < 30: Stocks are oversold, potential buy signal
• RSI > 70: Stocks are near overbought, consider selling

Stochastic Indicator: Identifies trend strength and reversal signals.

• Above 80: Overbought, potential reversal downward
• Below 20: Oversold, likely to rebound

If you’re not yet proficient with these tools, learn gradually and practice on demo accounts before trading with real money.

7. Technique for Catching Stock Bottoms – Highest Profit Potential

Correctly catching the bottom can generate extraordinary returns but is very risky.

Signals indicating a stock is near bottom:

• Price continuously makes new lows, but momentum indicators (RSI, Stochastic) start rising – showing weakening downward momentum
• Price forms higher lows over time – selling pressure is easing
• Large trading volume during declines – signals investors are returning

However, trying to catch falling knives is dangerous. Only risk a small portion of your capital for testing, never gamble all assets. Avoid bottom-fishing for speculative or penny stocks, as these can fall sharply when declining.

8. Do Not Borrow Money to Invest

This is a vital lesson for all investors. Only use money you can afford to lose.

Borrowing at high interest rates to invest is very dangerous, especially through unofficial platforms with interest rates up to 1000% per month.

You can use margin (borrowing from exchanges) sensibly to amplify profits, but must understand the risks. When using margin, the worst-case loss is losing your initial capital; you won’t be in debt.

9. Constant Practice and Learning

A valuable lesson from Warren Buffett: never lose money unnecessarily in investing.

To do this, you must:

• Continuously learn investment theory
• Analyze real stocks daily
• Practice trading on demo accounts before using real money

Practical education comes from trial trading to accumulate knowledge and experience. Start small, use training tools to record lessons, analyze mistakes, and adjust strategies.

10. Maintain Psychological Stability – The Key to Success

This is arguably the most important secret in self-learning stock investing.

Markets are highly volatile. A position with big gains can turn into losses in 1-2 days. Emotions like fear, greed, panic can lead to wrong decisions.

To stay psychologically stable:

• Analyze the reasons behind each market movement
• Make hold or cut-loss decisions based on data, not emotions
• Avoid panic selling; you may regret later
• Follow your planned discipline strictly

Conclusion

Self-educating in stock investing is a long journey requiring patience, discipline, and mental resilience. The 10 principles above are the foundation to help you avoid common mistakes and develop sustainable investment strategies. Start with basic principles, practice on simulators first, then gradually apply to real trading. Success in stocks is not about luck but about knowledge, discipline, and stable mindset.