No matter whether you are a new investor or a seasoned veteran, these four key tips can help you learn how to trade stocks and make greater profits with less risk. They’re at the core of the advice we give in our investment services, including Canadian Wealth Advisor, our newsletter for more conservative investors.

Successful Investor Tip #1: Hold mainly high-quality, dividend paying stocks or mutual funds that hold those stocks

We think investors will profit most — and with the least risk — by buying shares of well-established companies with strong business prospects. These are companies that have strong positions in healthy industries. They also have strong management that will make the right moves to stay competitive in a changing market.

A long-term record of dividends gives investors a measure of safety. Dividends, after all, are more stable than earnings. More important, dividends are impossible to fake — either the company has the cash to pay them or it doesn’t.

That’s not to say that there won’t be surprises that affect every company in a particular industry. But well-established stocks have the asset size and the financial clout — including solid balance sheets and strong cash flow — to weather market downturns or changing industry conditions.

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Successful Investor Tip #2: Keep your portfolio well balanced among the five economic sectors

Remember to spread your portfolio out across the five main economic sectors (Manufacturing & Industry; Resources; Consumer; Finance; and Utilities). That way, you avoid overloading yourself with stocks that are about to slump simply because of industry conditions or changes in investor fashion.

By diversifying across the sectors, you also increase your chances of stumbling upon a market superstar — a stock that does two to three or more times better than the market average. These stocks come along every year. By nature, their appearance is unpredictable; if you could routinely spot them ahead of time, you’d quickly acquire a large proportion of all the money in the world, and nobody ever does that.

Successful Investor Tip #3: Downplay or avoid stocks in the broker/public relations limelight

These stocks tend to develop exaggerated expectations, especially from inexperienced investors. When you are thinking about how to trade stocks for a profit, avoid those that have been getting a lot of attention from brokers, or that carry out aggressive public-relations efforts. This kind of attention tends to build optimism and push these stocks up to unreasonable highs.

But if the market weakens, or if these firms run into difficulties, these stocks can drop sharply. That’s why it’s a good idea to limit your exposure to them.

Successful Investor Tip #4: Focus on stocks with hidden or little-noticed assets

Little-noticed assets are easy to overlook, since their full value rarely appears on a company’s financial statements.

These assets include long-time real estate holdings that are worth much more than the balance-sheet value. Research spending is a good example. Companies write off their research outlays in the year they spend the money, but benefits, such as new or better products, may only materialize years in the future.

If you’d like more of this type of safety-conscious investment advice, you should subscribe to Canadian Wealth Advisor. Click here to learn how you can get one month free when you subscribe today.