I've been an active investor for about a year and half now and have made and lost thousands. At one point I was up as much as 40% but then a company I was invested in was raided by the FBI with guns drawn; didn't see that one coming. Bye bye $6,000.

So in these ups and downs I try to learn things and one of the biggest lessons I received was that identifying a great company is not enough; you also need to know when to buy and sell its stock. For instance, show me any stock chart of a company that has been public for at least one or two years and I will show you at least a 20-30% decline sometime during its existence.

To help me get something out of the lessons I dearly paid for I wrote some things down.

1. Buy in Pain, Sell with Joy - When buying it is good if you are in pain and concerned. When selling you want to be happy. If you are very excited when you are buying you may be in a greedy frame of mind. If you are tortured when selling or when holding a stock that is in trouble it's as Dean Wormer said, "...no way to go through life", but it is a way to go through your money.

2. Don't Beat Yourself up- if you seem to be buying when you should have sold and selling when you should have bought try not to beat yourself up. Wall Street has a much better idea of what you will do than you know what Wall Street will do. And yes, they want you to do what is good for them and bad for you.

3. Name that Boat!, then again, maybe Not - When your stock is going up and you are making money, you may start to think you can do no wrong and you will soon be able to buy a boat or some other extravagant item. Then when someone asks how you were able to make the purchase you can smugly point to the name of the stock on the back of the boat or on the sports car license plate and explain how smart you are. By then of course you will have quit your boring day job and be sitting at home and trading stocks for a living and everyone will look at you in amazement and beg for stock tips. Don't be so optimistic, the market has a way of inflicting the maximum amount of pain to the maximum amount of people in a very short time frame.

4. Manage risk - It's not about making money, it's about not losing money. If you take care to minimize losses, profits will take care of themselves. Worrying about what can go wrong is more important than hoping for profits. Looking at reasons why a trade can go against you before buying and deciding what to do about it in advance is more important than thinking about what you will do if the trade does work in your favor. If you are primarily concerned with profits you may go on tilt after a bad trade and make an impulsive buy, throwing caution to the wind. And yes, there will be bad trades.

5. Put the cash in your hand - If you are making money in an account you can pull from, pull it! It's your money; you earned it, go out and use some of it. If you just leave the money as paper profits it will not mean as much as cold hard cash you can feel in your hand. If the profit is made in a 401K or other account that you cannot withdrawal from, think of the profit as meeting another goal. Maybe for every $1K made, you get to retire one week sooner, maybe it means your retirement salary just went up. Giving yourself a reward for hard work will give you more appreciation for what occurred and encourage you to take, and protect your profits.

6. Ignore Emotions When Buying - Once the homework is done, don't follow your emotions when buying; you want to follow your head. Understand why you think you will make money on the trade, protect to the downside and do not buy if you feel time is running out, there is always time, or another stock to consider.

7. Follow Emotions When Selling - Do follow your instincts when deciding to sell. You will know when the stock, or ETF or whatever is not moving the way you thought it would. Go with that notion and sell, do not start rationalizing and stay in a falling stock. There will be times when a stock you sell will immediately go up but this is a better alternative than staying in a stock that continues to go down. Again, side with protecting your money vs. trying to make it grow.

8. I have Seen the Enemy and he is Us - Meet Mr. Fear, Mrs. Hope and Mr. Greed.

· Mr. Fear is actually the weakest enemy of the three because if you quickly fall prey to Mr. Fear and sell because of him (see #7 above); you can always come back and fight another day. To think about this another way if you lose 10%, you will need to make 11.1% to get back to even, if you lose 25% you will need to make 33.3% to get back to even, and for the big one, if you lose 50% you will need to make 100% to get back to even.

· Mrs. Hope is very seductive and tricky. She'll keep you hanging around longer than you know you should and make you ignore #7 above. Mrs. Hope usually comes to visit when you are at a loss. She suggests "you can't sell now, it's too late and if you just have enough patience and loyalty to me the trade will get back to even and then you can get out of it, promise." She'll tell you, "it is the market that is wrong, not you; you are too smart for that."

· Mr. Greed will beat you up and knock you silly. Instead of getting beat up, see #5 above and put some cash in your hand. Mr. Greed is one strong dude because he wants your profits, all of them. When you have a profitable trade, instead of selling and taking the money Mr. Greed will say, "stay in, that boat is only three months away."