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Are you making "Money" in Stock Market?
Your stock trading rules are your money. When you follow your rules you make cash. However if you break your own stock trading rules the likeliest result is that you are going to lose money. When you have a trustworthy set of stock trading rules it's vital to keep them in mind. Here is one discipline that may harvest rewards.
"Warren Buffet says:
Rule No. 1 - Never Lose Money
Rule No. 2 - Never Forget Rule No. 1"
Rule one : You must follow the rules. Naturally if you develop a collection of rules they are going to be followed. It is human instinct to need to alter or break rules and it takes discipline to continue to act as per the established rules.
Rule two : You will never risk more than three percent of your total portfolio on any one stock trade. There are lots of old traders. There are lots of bold traders. But there are never any old bold traders. Defending your capital base is elemental to successful stock market trading over a period.
Rule three : Cut your losses at five percent to 15% when you are wrong without query. Some traders have an even lower tolerance for loss. The key reason here is to have set points ( stop loss ) in the boundaries of your toleration for loss. Stay informed about the performance of you stock and stick to your stoploss point.
Rule four : Never set price targets. This is a style which will let you get the most out of rising stocks.
Make Money, Make Profits
Realistically, you will never pick tops. Never feel a stock has risen too high too fast. Be prepared to give back a good share of profits in the expectation of much bigger profits. The serious coin is made of trading the truly Large moves that you will often catch.
Rule five : Master one style. Continue learning 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 several styles.
Rule six : Let price and volume be your 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 seven : Take all valid signals that show up. Don't come up with excuses. If an entry signal shows up you haven't any excuse to not take it.
Rule eight : Never trade from intra-day info. There's always share price adaptation in the course of any trading day. Counting on this information for momentum trading can lead to some wrong choices.
Rule nine : Take time out. Successful stock trading isn't only about trading. It is also about emotional strength and physical fitness. Cut back the stress each day by taking time off the PC and working on other areas. A difficult trader won't make it in the long run.
Rule ten : Be a better than average trader . To achieve success in the stock market you do not want to do anything phenomenal. 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 technique today?" If your answer is no then you're in difficulty and it is time to recommit yourself to your stock trading rules.
Remember: "Emotions are your worst enemy in the stock market"
Sonia Kang, Writer