10 Golden Rules For Stock Trading Success
Your stock trading rules are your money. When you follow your rules you make money. However if you break your own stock trading rules the most likely outcome is that you will lose money.
Once you have a reliable set of stock trading rules it is important to keep them in mind. Here is one discipline that can reap rewards. Read these rules before your day starts and also read the rules when your day ends.
Rule 1: I must follow my rules.
Naturally if you develop a set of rules they are to be followed. It is human nature to want to vary or break rules and it takes discipline to continue to act in accordance with the established rules.
Rule 2: I will never risk more than 3% of my total portfolio on any one stock trade.
There are many old traders. There are many bold traders. But there are never any old bold traders. Protecting your capital base is fundamental to successful stock market trading over time.
Rule 3: I will cut my losses at 5% to 15% when I am wrong without question.
Some traders have an even lower tolerance for loss. The key point here is to have set points (stop loss) within the limits of your tolerance for loss. Stay informed about the performance of you stock and stick to your stop loss point.
Rule 4: Never set price targets.
This is a style that will allow me to get the most out of rising stocks. Simply let the profits run. Realistically, I can never pick tops. Never feel a stock has risen too high too quickly. Be willing to give back a good percentage of profits in the hope of much bigger profits.
The big money is made from trading the really BIG moves that I can occasionally catch.
Rule 5: Master one style.
Keep learning and getting better at this one method of trading. Never jump from one trading style to another. Master one style rather than become average at implementing several styles.
Rule 6: Let price and volume be my guides.
Never listen to any opinion about the stock market or individual stocks you are considering trading or are already trading. Everything is reflected in the price and volume.
Rule 7: Take all valid signals that show up.
Don't make excuses. If an entry signal shows up you have no excuse not to take it.
Rule 8: Never trade from intra-day data. There is always stock price variation within the course of any trading day. Relying on this data for momentum trading can lead to some wrong decisions.
Rule 9: Take time out.
Successful stock trading isn't solely about trading. It's also about emotional strength and physical fitness. Reduce the stress every day by taking time off the computer and working on other areas. A stressful trader will not make it in the long term.
Rule 10: Be an above average trader.
In order to succeed in the stock market you don't need to do anything exceptional. You simply need to not do what the average trader does. The average trader is inconsistent and undisciplined. Ask yourself every day, "Did I follow my method today?" If your answer is no then you are in trouble and it's time to recommit yourself to your stock trading rules.
Want to buy your stock for half price? Find out how for free at www.Autopilot101.com/free/reports/half_price_income.htm and www.Autopilot101.com/free/reports/half_price_growth.htm
Also, be sure to check out all our free reports, ebooks, courses, and software at www.Autopilot101.com
More Articles
Fast Facts About Stocks Trading
How To Boost Your Stock Returns While Lowering Your Risk
An Overview Of The Stock Market
How To Buy Stocks For Half Price And Slash Your Risk At The Same Time
Investing In The Stock Market: How To Get Started
Identifying Trends In The Stock Market
5 Steps To Researching A Stock Trade Before Investing
Related Products And FREE Videos
More Articles
How To Boost Your Stock Returns While Lowering Your Risk
... never moves, you'll earn 4.2% per year. At the same time, you would participate in Covered Call Writing. To do so, you, you would "write three January 50 Calls." This means you are selling ("writing") the right for someone else to buy the stock from you (they "call" it away) between now and the third Friday of January at the specified price of $50. (All contracts expire the third Friday of the month.) ...
Margin Trading Dangers Highlighted By Real Cases
... cases, dumping of directors', executives' and related party holdings have indeed seen share prices slashed, stock exchange listings suspended, directors and executives lose their jobs with their entire company shareholdings wiped out. Residual personal liabilities are suspected of being huge in some cases. Consequently, private investors have also suffered massive write downs in the value of their own ...
Identifying Trends In The Stock Market
... course. 4. Discovering volume The daily sales volume of the markets are frequently used to set understand volume. The daily sales volume is easily obtained from several websites online. If the market has experienced a high-volume day and prices are up (on the three indexes) then the market is up. Huge investors will frequently buy and boost markets under certain conditions. Want to buy your stock for ...
5 Steps To Researching A Stock Trade Before Investing
... will be used before EACH trade. Here is a simple 5 Step formula to help get you started. 5 Steps to Investing Online: 1. Find a stock This is the most obvious and most difficult step in stock trading. With well over 10,000 stocks to trade a good rule of thumb to consider is time of the year. For example, as I write this, it is the beginning of spring. It would make sense to consider stocks that traditionally ...
... the fair value of a company. However, before we even do that, it is imperative to know how a company earns its profit. Does it do that by selling to consumers? licensing its technology to other companies? or extracting natural resources from the ground? The sensible way to do it is by reading the company's annual report. What is an annual report? Annual report is yearly publication by public companies ...