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Individual investors should never do this

Tuesday, 11 Feb 2014 | 6:14 PM ET
This rule will help your portfolio
Friday, 9 Aug 2013 | 6:15 PM ET
Never, ever buy stocks on margin, explains Mad Money host Jim Cramer. If you buy on margin, you cannot take losses.

(Click for video linked to a searchable transcript of this Mad Money segment!)

If you're relatively new to the market, there's something Jim Cramer doesn't want you to do. He doesn't even want you to think about it.

Under no circumstances should individual investors use market orders.

Unfortunately, all too many people who are new to the stock market don't even know what that means.

"When you call your broker and tell him to buy or sell a stock, but you don't name a price, that's a market order," explained the "Mad Money" host. "You may not realize it, but what you're doing is giving that broker permission to fill your order at any price."

When explained that way, Cramer said, of course you wouldn't place a market order.

"Would you go at supermarket and say I'll buy a head of lettuce at any price? Would you do that with a sweater at the mall? No, of course not," Cramer said.

However, it happens all too often when people go shopping for stocks simply because new investors don't know any better.

Martin Diebel | Getty Images

Instead Cramer said use limit orders.

"All you have to do is tell your broker the highest price you're willing to pay if you're buying, and the lowest price you're willing to take if you're selling. That way you will always either get your price, or the trade simply won't happen," Cramer said.

Cramer wants every new investor to get in the habit.

"It's the easiest thing in the world to do and doesn't cost a penny more, but over time it could save you a small fortune, especially on days when the action goes haywire," he said.

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And while he has your attention, if you're an individual investor Cramer also said never buy stocks on margin – meaning do not borrow money from your broker to purchase stocks.

"Buying on margin might seem like a great method for making a small amount of money go a long way, but in reality it's just a great way to wipe yourself out," Cramer cautioned. "The practice is just plain dangerous, especially if you're new and don't know what you're doing."

* Although we all love curling and the Olympics on CNBC television, if you're still looking for money making insights from Jim Cramer, you'll find plenty right here on Mad Money's website. We've scoured the archives and selected favorite articles and videos that are both timeless and relevant; information you can use right now. Look for something every day.

Call Cramer: 1-800-743-CNBC

Questions for Cramer? madmoney@cnbc.com

Questions, comments, suggestions for the "Mad Money" website? madcap@cnbc.com

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