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 — to a sleeve, a position, or the market in general. It converts investing from a mood into a process, stopping you from buying on impulse, hype, or fear of missing out.
A buy rule can take many forms: 'I only add to a position after I've written a thesis and it still trades below my fair-value estimate,' or simply 'I invest my scheduled contribution on the first of every month, regardless of the news.' The point is that the decision to deploy capital is governed by a pre-set condition rather than by how you feel in the moment. This guards against the classic mistakes of buying at the top in euphoria and freezing in fear, and — paired with a sell rule — it turns your whole approach into a disciplined, repeatable process rather than a series of emotional reactions.
A buy rule converts investing from a mood into a process: new money must clear a pre-set condition — a written thesis, a price below fair value — before you commit. A hot tip that fails the rule is passed over.
For example
Your buy rule: 'Only add to a stock after writing a thesis, and only below my fair-value estimate.' When a hot tip tempts you, the rule stops you — no thesis, no buy.
Learn it by doing
That's Buy rule in theory — it clicks when you use it. Practise it hands-on in a free, interactive lesson (Stage 20, The Investor's Playbook).
Try the free lesson →Why it matters to you
A buy rule matters because the decision to deploy capital is where FOMO, hype, and impulse do their damage, and a pre-set condition is the defence. By deciding in advance what must be true before you buy, you replace emotional, in-the-moment purchases with a disciplined process you can repeat. It's the buying counterpart to a sell rule, and together they turn investing from a stream of reactions into a consistent method — which is what separates disciplined investors from those chasing every opportunity.
⚠ Making an exception 'just this once'
A buy rule only works if you honour it — and the temptation is to waive it for the one exciting opportunity that 'can't wait'. But the whole point is to govern exactly those impulsive, hype-driven moments. Overriding your buy rule for a hot tip or a can't-miss story reintroduces the emotional buying it was meant to prevent. The exceptions are where the mistakes happen.