This is good simple advice that everyone should understand. I've been reading books to improve my trading and these points have been repeated in all of them. They really opened my eyes to where I was making mistakes, and it has improved my stock selection and capital preservation.
My biggest losses have come from a combination of putting too much money into a stock and at the same time buying in when it is either trending down or has peaked.
There are a whole lot of other factors that come into play when choosing a winner, but I think if you ignore the simple points, you end up setting yourself up for losses IMO.
