Golden Rules For Making Profits in Stock Trading
Every game or every business for that matter has its rules that the participants must abide by in order to win.
But more important than observing the rules of the game is the attitude of the player which involves one's ego.
Control your ego It is the ego that determines how you take your profit and loss.
If you feel too inflated with your profits in a trade, you may tend to be over aggressive or less guarded in your subsequent trades that might result in suffer losses.
At other times if your ego is deeply bruised at the loss, you may become nervous and impair your judgment in the future trade and cause you to suffer losses again.
You must be aware that you are not the only one who has suffered loss in a particular trade against your high expectations; there may be hundreds and thousands just like you.
Furthermore, you must always bear in mind that profit and loss, victory and defeat are part of the game.
Even the best players lose.
So take the consequences of your trades in stride.
Yet another important point to remember is that you are in the business of stock trading for your own personal benefits.
You are not engaged in a public show.
Do not try to play to the gallery.
So if you suffer a loss, it is not a matter of public shame.
You are not trading in stocks to impress your friends.
You are here to make money.
Again, do not let a loss affect your ego.
Cut short your losses Do not try to hold on to a losing horse.
"Cut your losses short and let your profits run" is a golden rule to make profits in stock trading.
Hold on to a trade if its price is going up, or does not cross your stop loss limit.
Experienced stock traders recommend that you should hold a trading position from two weeks to three months and quit thereafter.
With the popularity of the ETFs growing, it is quite as easy to be short as long.
So do not bother too much about the market trend, whether it is heading towards recession or boom.
There is always an opportunity for a wakeful stock trader even in slump.
The only thing is that you need to find it.
The stock market is comprised of several industry sectors such as energy, oil, technology, metals, mining, software, pharmaceuticals, cements and much more.
Each industry sector remains in a state of rally or pullback.
You should keep your eyes open and follow their performance regularly.
Identify the sectors that are rallying and invest.
Identify the stocks that are large and have bigger trade volumes.
Choose a few such stocks and keep track of their performance on daily basis on your charts.
Do not try to track the broad market trends.
Forming opinions about a broader market is not going to help you.
Instead, concentrate on the market trends of the special industry sectors that you have picked up for investment.
Identify the stock and follow a three-month cycle rhythm.
Watch their performance every day and try to track their trading patterns.
Take your long or short position as the opportunity arises.
Whatever money you want to invest, divide it into ten parts and then invest it into a mix of long and short positions.
Do not be impatient about investing your money.
You do not need to invest all your money all the time.
Wait for the right investment opportunities.
An industry may get a sudden windfall triggered by some financial or political events, grab the opportunity and make profits.
Keep increasing your investment A down market provides a great opportunity for investment.
Do not worry if the value of your existing stocks has gone considerably down.
It will go up.
This is the way with the stock market.
So do not be scared, buy some good performing stocks and you will reap a good harvest when the market goes up.
Keep investing a small part of your monthly savings irrespective of the market position.
You will be on your way to a brighter future.
Develop your own system If you continue to trade in stocks, you will naturally make mistakes that provide a great opportunity to learn.
You will also make profits which will boost your confidence.
In the course of time, you will develop your own personal philosophy.
You will be able to draw up your own trade plans and improve upon them in time.
This will enable you to develop your criteria and check lists to identify the potential stocks.
You will also learn when to enter or exit.
You evolve an intuition for good or bad trades and will no longer be affected by your emotions or prejudices.
You will learn to fix your goals and achieve them too.
But more important than observing the rules of the game is the attitude of the player which involves one's ego.
Control your ego It is the ego that determines how you take your profit and loss.
If you feel too inflated with your profits in a trade, you may tend to be over aggressive or less guarded in your subsequent trades that might result in suffer losses.
At other times if your ego is deeply bruised at the loss, you may become nervous and impair your judgment in the future trade and cause you to suffer losses again.
You must be aware that you are not the only one who has suffered loss in a particular trade against your high expectations; there may be hundreds and thousands just like you.
Furthermore, you must always bear in mind that profit and loss, victory and defeat are part of the game.
Even the best players lose.
So take the consequences of your trades in stride.
Yet another important point to remember is that you are in the business of stock trading for your own personal benefits.
You are not engaged in a public show.
Do not try to play to the gallery.
So if you suffer a loss, it is not a matter of public shame.
You are not trading in stocks to impress your friends.
You are here to make money.
Again, do not let a loss affect your ego.
Cut short your losses Do not try to hold on to a losing horse.
"Cut your losses short and let your profits run" is a golden rule to make profits in stock trading.
Hold on to a trade if its price is going up, or does not cross your stop loss limit.
Experienced stock traders recommend that you should hold a trading position from two weeks to three months and quit thereafter.
With the popularity of the ETFs growing, it is quite as easy to be short as long.
So do not bother too much about the market trend, whether it is heading towards recession or boom.
There is always an opportunity for a wakeful stock trader even in slump.
The only thing is that you need to find it.
The stock market is comprised of several industry sectors such as energy, oil, technology, metals, mining, software, pharmaceuticals, cements and much more.
Each industry sector remains in a state of rally or pullback.
You should keep your eyes open and follow their performance regularly.
Identify the sectors that are rallying and invest.
Identify the stocks that are large and have bigger trade volumes.
Choose a few such stocks and keep track of their performance on daily basis on your charts.
Do not try to track the broad market trends.
Forming opinions about a broader market is not going to help you.
Instead, concentrate on the market trends of the special industry sectors that you have picked up for investment.
Identify the stock and follow a three-month cycle rhythm.
Watch their performance every day and try to track their trading patterns.
Take your long or short position as the opportunity arises.
Whatever money you want to invest, divide it into ten parts and then invest it into a mix of long and short positions.
Do not be impatient about investing your money.
You do not need to invest all your money all the time.
Wait for the right investment opportunities.
An industry may get a sudden windfall triggered by some financial or political events, grab the opportunity and make profits.
Keep increasing your investment A down market provides a great opportunity for investment.
Do not worry if the value of your existing stocks has gone considerably down.
It will go up.
This is the way with the stock market.
So do not be scared, buy some good performing stocks and you will reap a good harvest when the market goes up.
Keep investing a small part of your monthly savings irrespective of the market position.
You will be on your way to a brighter future.
Develop your own system If you continue to trade in stocks, you will naturally make mistakes that provide a great opportunity to learn.
You will also make profits which will boost your confidence.
In the course of time, you will develop your own personal philosophy.
You will be able to draw up your own trade plans and improve upon them in time.
This will enable you to develop your criteria and check lists to identify the potential stocks.
You will also learn when to enter or exit.
You evolve an intuition for good or bad trades and will no longer be affected by your emotions or prejudices.
You will learn to fix your goals and achieve them too.
