The ASX Share market can be a great place to increase your wealth – provided you make the right moves from the start. By this I mean that there are a few fatal mistakes that can cost people their nest eggs, and see them leaving the market for good.

Say you took $150 a month, and starting in 1980 invested in the ASX share market. You earn an average of 15% per annum, and today that $150 a month is worth $1,038,490. Over a million dollars using just $5 a day.

But not everyone makes it that far. In fact statistics show that over 82% of traders lose a large portion of their capital and never trade again. If you are investing for the long term, your odds are slightly better (although 2008 scared a lot of investors out as well). But the thing is – now they miss out of the rest of those gains, on that million dollars that we discovered.

So if you are trading in ASX shares, there is something important you should know. One of the first but most overlooked essentials in investing is making a solid trading plan. In fact, without it you simply shouldn’t be investing. But how do you find a trading plan that suits you, and helps you make the most from your money?

Well, one man’s trading plan is another man’s ruin. In other words, we are all different – and we all invest differently. But there are a few solid ground rules that will make your job easier. So having a trading plan should definitely involve the following:

1: Your Rules for Buying and Selling – these are the rules you have tested that determine when you buy and when you sell a share. Whether it is buying for fundamental reasons, like company earnings or book price, or whether it is for technical reasons like crossing a trend line or Dow theory it doesn’t matter: so long as it suits you.

2: Your Money Management Rules – this is where you decide how much of your portfolio you will invest in one share. And also how many positions you will spread your portfolio across. As a guide, between 6 and 12 positions is usually optimum. Any less than 6 and you risk not being diversified enough. Any more than 12 and you risk being unable to out-perform the market (the best portfolios are often slightly focused).

Having these in place will set you on your way to a solid start in ASX Shares.

Visit www.asxmarketwatch.com for more information on ASX Shares, including a free course and free market research on Australian Stocks.