Say you buy shares for R10 each. When buying that share you decide what percentage stop loss you want (perhaps 15%) and tell your broker to sell it if it drops below R8.50. Brokers will not guarantee this and most of them would expect you to also follow your shares.

At R8.50 your stop loss (or safety net) protects you from losing any more than approximately R1.50, depending on what price the sale is actually made. When the share price rises to say R12, you increase your stop loss to R10.20. Now your safety net protects you from losing any more than approximately R1.80. As your share increases in value, you increase the level of your stop-loss.

The above is called market timing and there are many methods that you can learn depending on the level of detail you wish to get into.

There’s no doubt about it – you can take a calculated risk and make some serious money on the stock exchange. Many people who are rich today have achieved their wealth through wise investment decisions.

Others have become rich through building a business then listing it on the Stock Exchange. When they get that money, it often ends up being spread amongst other listed investments. Whichever way you want to look at it, your life will be affected by what’s happening on the Stock Markets of the world. Learn about it and affect your life for the better.