Many times people ask me about rules of stock market trading. So here I am going to provide some points which will make you a successful stock market trader. Read the following point carefully & apply it into your daily trading strategies.
- Traders who are continually in the market day in and day out and never allow any time to elapse between trades, sooner or later lose all their money.Have a reason for every trade; don’t trade on hope.
- If you can not follow a rule, do not begin speculating or investing, as you are sure to lose.
- Learn to adhere strictly to a rule or do not follow it at all.
- Make speculation a business, not a gamble.
- Protect every trade with a stop loss order. There is nothing better than getting out quickly when you are wrong.
- Over-trading is the cause of more losses than anything else in the stock market.Make up your mind how much loss you can afford before you make a trade and not afterwards.
- Stick to small quantities. Be conservative. Do not over trade, especially at the bottom or top of long moves.
- Avoid getting overconfident at tops and bottoms & do not allow your judgment will be influenced by hope or fear.
- Never let a profit run into the loss. People often buy or sell a stock and it shows them a good profit, but they are “hoggish,” expect more, hold on and hope and let it run into a loss, which is very poor business, and the man who follows it will not succeed in the end. Always protect your principal in every way possible.
- One of the most vital and important things for either an investor or a trader to learn is to take a loss and take it quickly.
- When you buy or sell a stock and it does not act right immediately or start to move in your favor within a reasonable length of time, get out of it.
- Always confine your trading to standard, active stocks listed on the Stock Exchange
- Big money is made, not from dividends but from fluctuations, if you know how to trade quickly. Of course, the big money is always made in trading in stocks that fluctuate over a wide range.
- Hope will ruin any man who follows it in the stock market. To succeed you must face facts, and facts are often cold and stubborn and do not agree with your hope, but you must accept them for your own good.
- Never get the idea in your head that you can or will hold a stock until it goes your way. This is nothing but pure stubbornness and is not based on any sound logic or reasoning. In case of doubt, get out. Do not hesitate. Delays are always dangerous.
- if the market will not go as your way, they go its own way. A wise man changes his mind, a fool never.
- Protect profits with stop loss order, but do not take a profit too soon.
- It is financial suicide to take big losses when they can be prevented.
- Be a Bear in a Bear market and a Bull in a Bull market.
And finally every trader should remember that the weakest point of all is over-trading, and the next, failing to place a stop loss order, and the third fatal mistake of all, averaging a loss. So eliminate all these three mistakes with above all points then you will make a success in the stock market trading industry.
