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Stock Market Trading Tips

There are so many stock market trading tips available online. In this article we focus on stock market trading tips that can be applied to other types of trading in addition to trading stocks.

Tip #1 Create a plan and stick with it. If you want to have consistent trading success you must create a trading plan that works and stick to it. This plan must include the set of trading rules that you have defined, your trading strategies, and techniques, and much more. You must include your entry and exit points as well as your stop loss strategies. You must also document your emotions that you felt during a trade so that you prevent emotional trading. 

Tip #2 Test your plan. Your trading plan is not worth sticking to if you havent tested it to ensure that it works. Once of the most important stock market trading tips that you will come across is to test your plan. Online paper trading is a great way to accomplish this. You can practice trading just as you would but without trading real money. Your broker should have a demo account set up for you to do this so that you can get used to the trading system and your plan before trading with real money.

Tip #3 Cut your losses and let your winners run. The key is to minimize your losses and dont try to win every single trade. On the other hand, you must let your winners run and don't close out of trade too early for fear of missing a small but real profit. Simply follow your trading plan. Every single trader, no matter the experience level loses out on trades. That is just part of the stock market game.

Tip #4 Know what you can afford to lose. Before you know how much you can afford to invest you must know how much you can afford to lose. Investing money is risky and you should only invest what you can afford to lose so that you do not negatively affect the quality of your life. Only trade what you can afford to lose and do so knowledgeably. Make sure you know exactly what you are doing before you place that first trade.

Tip #5 Know yourself. Pay attention to who you are. Are you the kind of person who analyzes every single detail or do you fly by the seat of your pants? Do you panic under pressure? Understand the psychology and trading and answer these questions about yourself before you begin to trade.

Market Direction:  Discussing returns with fund managers, a common revelation occurs. The use of candlestick analysis would have been a valuable analytical tool over the past couple of years. Candlestick signals are the most basic indicators of what is occurring in the markets. It is an immediate reflection on what is happening to investor sentiment. Whether investing for the long-term or day trading on a one minute, five-minute, 10 minute chart combination, there is only one compelling factor. Prices move based upon the perception of investors.

This may seem like an oversimplified statement, however reality shows that many fund managers felt there were strong fundamentally sound companies to be investing in two years ago. Many companies did not have their fundamentals altered dramatically over that time frame, but the perception of what that company was worth diminished greatly. The power incorporated in the candlestick formations provide the optimum price analysis tool. If fundamentals moved prices, we would not see reoccurring price patterns. Fundamentals do not move in waves.

Take advantage of candlestick price patterns. That is the accumulative knowledge of the fundamental research and technical research influencing investors buy and sell decisions. The results of candlestick signals and patterns can keep an investor from having investment funds sitting in positions for long periods of time when those funds should be working elsewhere. The Japanese Rice traders developed investment perceptions, using the graphics of the candlestick signals, that were the result of common sense investment practices.

Candlestick analysis provides a very accurate evaluation of what is occurring in the market trends. This information can then be overlaid into individual stocks/sectors. The market conditions that we are experiencing now, a slow sideways trend, reveals valuable information. Although there is not strong upside potential, there is also the lack of any great downside potential. For most investors, this evaluation is like kissing your sister, there is just nothing there. For the candlestick investor, it reveals one important factor. The downside does not show any great enthusiasm. This information is important when positioned in candlestick patterns.


A Fry Pan Bottom is a pattern that when allowed to fully perform has very strong upside ramifications. The simple logic of how a Fry Pan Bottom is formed permits a candlestick investor to participate in high profit moves. The same results occur in the other candlestick patterns. When most investors are sitting in lethargic positions in a sideways moving market, the candlestick investor can be taking advantage of the big potential moves. Profits can be made by continuing to hold patterns that are heading for a breakout. The probability of a breakout occurring is much higher when knowing the overall market trend is not create a negative investor sentiment.



Put the information that is built into candlestick signals to your advantage. Candlestick analysis provides the analytical process for identifying which stocks/ sectors are moving, based upon the inflow of bullish sentiment. This is not a difficult process to learn. Once you have recognized which patterns/signals work most effectively, you control the profitability of your own portfolio.

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Good investing,

The Candlestick Forum Team

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