10 Golden Rules For Stock Trading Success

April 4, 2013

Your stock trading rules are your cash. When you follow your rules you make cash. However if you break your own stock trading rules the most probable outcome is that you'll lose cash.

After you have a trusty set of share trading rules it's vital to keep them in mind. Here is one discipline that will reap rewards. Read these rules before your day starts and also read the guidelines 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 man's nature to want to alter or break rules and it takes discipline to continue to act as per 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. Shielding your capital base is fundamental to successful stock exchange trading over a period.

Rule 3: I'm going to cut my losses at 5% to 15% when I'm wrong with no question.

Some traders have an even lower toleration for loss. The key reason here is to have set points (stop loss) within the boundaries of your tolerance for loss. Stay informed about the performance of you stock and stick to your stoploss point.

Rule 4: Never set price targets.

This is a fashion that will allow me to get the best from rising stocks. Simply let the profits run. Realistically, I will never pick tops. Never feel a stock has risen too high too fast. Be content to give back a good percentage of profits in the hopes of much bigger profits.

The big money is made of trading the truly BIG moves that I can on occasion catch.

Rule 5: Master one style.

Continue to learn and improving at this one strategy of trading. Never jump from one trading style to another. Master one style instead of become average at implementing a few styles.

Rule 6: Let price and volume be my guides.

Never hear any opinion about the exchange or individual stocks you are considering trading or are trading. Everything is mirrored 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 got no reason not to take it.

Rule 8: Never trade from intra-day data. There's always stock price change within the course of any trading day. Relying on this data for momentum trading can end up in some wrong choices.

Rule 9: Take time out.

Successful share trading isn’t only about trading. It's also about emotional strength and physical fitness. Reduce the stress every day by taking time off the PC and working on other areas. A disturbing trader will not make it in the long term.

Rule 10: Be a better than average trader.

So as to succeed in the stock market there is no need to do anything outstanding. You just need to not do what the average trader does. The average trader is inconsistent and unruly. Ask each day, “Did I follow my strategy today?” If your answer's no then you're in difficulty and it is time to recommit yourself to your stock market trading rules.

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