Investing term

What is Buy rule?

A pre-written condition that has to be true before you allocate new capital — to a sleeve, a position, or the market in general.

A buy rule is a condition you write down in advance that must be true before you commit new money. It converts investing from a mood into a process, stopping you from buying just because a price is rising or a story is exciting. The rule can be about valuation, allocation, or simply a scheduled contribution.

For example

"Only add to a position when it's below my estimated fair value" is a buy rule — it keeps you from chasing a stock that's already run up.

Buy rule is taught hands-on in Stage 20 — The Investor's Playbook.

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Related terms

Abandonment triggerThe specific scenarios in which you would actually break your written plan — surfaced and named in advance so you can defend against them.Do-nothing ruleAn explicit commitment to NOT trade in response to specific common triggers (single headlines, short-term volatility, peer envy).Investment Policy Statement (IPS)A written one-page document stating your time horizon, target allocation, position limits, rebalancing rule, and crash behaviour.Life eventA real-life change (job change, marriage, child, medical, large planned spend) that legitimately justifies revisiting the plan.
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