Candlestick Trading Blog
October 21, 2008
Stock Trading Rules
| There are a large number of rules that every investor should follow when trading in the stock market however in today's article we will discuss only a handful of those that are very important. Stock Trading Rules #1 Perhaps the most important rule that cannot be stressed enough, is the importance of maintaining discipline in your trades. Every investor must adhere strictly to the trading plan that he or she came up with. Every investor will want to stray from the plan but the most successful are disciplined and follow their own trading rules. Once example of what should be included in your plan is when to cut your losses. If you don't have this defined, then you are sure to lose money. Stock Trading Rules #2 Investors must master one style of trading first, before moving on to other types of trading styles. You should never jump from one trading strategy to another but should aim to master the style that you have chosen. Once mastered, then you can move on to other types of trading strategies and styles. Additionally, investors should keep their trading system easy and should aim to eventually master only one or two investment strategies. Stock Trading Rules #3 Read the signals and follow them. You must take all of the valid signals that show up. If you see an entry signal, get in, or you are missing out. Conversely, if you see a signal that tells you to exit the trade, then you better do it. Wishing, hoping, and praying won't get you anywhere. This type of behavior is also more indicative of gambling than of investing. Be sure you are investing money wisely, and not rolling the dice. Stock Trading Rules #4 Understand your tolerance for loss. You must have set points within the limits of what you consider your tolerance for loss. Investors do this through the implementation of simple stop loss strategies. You must protect your assets and through the implementation of stop loss strategies your objective is to provide a point where the reason for buying or shorting becomes null and void. Investors opt to cut their losses anywhere from five to fifteen percent. Determine your risk tolerance and implement your stop loss strategies today. Stock Trading Rules #5 Do not be greedy! The greedy use of margin can double your losses instead of doubling your profit! You are trading to make money right? Getting greedy will only disable your ability to do that. If you make investing mistakes, cut your losses and do not trade any further. These rules are only a few that are very important however you should continue to research investing methodologies to find out as much as you possibly can. Do this before you trade with real money, specifically though online paper trading, and make mistakes first without the risk of losing real money. Online Stock Market Reviews presented live via the internet by Stephen Bigalow |
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