The following are the 10 most important rules that can earn you handsome profit if applied correctly with discipline.
1. Come Prepared with A Trading Plan
Successful traders always keep the Trading Plans ready before any operation. Draw up a checklist or likely scripts for day trading and remain focused on the movement of these stocks only. For example, 'X' is on the verge of a bullish breakout from any model or the image of “Y" has decreased significantly after the first bend up move or the picture of "Z" is close to an important support level. A successful trader will focus on the movement of these stocks only and enter the stocks just when 'X' gives the expected performance of the image or 'Y' starts the up move or image of 'Z' breaks the support level to initiate the rapid growth of trade.
2. Trade in 2-4 stocks at A Time, With strict Stop Loss.
Year Bull move, most of the top positions and every move the majority of Bear stock moves south. Trader, as you are aware of this fact, you can’t buy 20 stocks and try to make a profit in all the 20 titles just because everyone is moving up or back down trend? What happens if the market turns, with no mention of any bad news? Want to follow all the shops in this situation? Intelligent and successful stock trading merchant keeps track of 2-4 stocks with a strict Stop Loss and keep a strict vigil to avoid bad luck, if nothing else.
3. Never Over Trade
It is the most common mistake made by traders, especially after a string of winning trades. This error usually do not just delete all the benefits, but puts traders in heavy losses. To stay on the market, while obtaining consistent profits in any case, operators should not go beyond their Risk Capital.
4. Trade ONLY in active & high Volume Stocks.
Many traders want to trade in liquid (high volume) stock. You can always count on the stocks which have a reasonably high volume over time. High Performance Systems have always recommended easy-genesis, and Stop Loss. In low volume securities the spread is too large and the possibility of stop loss getting triggered will not be too high as the script will move with a bigger than normal tick size.
5. Divide your risk capital in 10 equal Parts.
As part of a money management success, it is always advisable to split the capital (that you can afford to lose) into 10 equal parts. At any given point of a time there should be no trades employing more than 3 parts of the capital , even if you are in a winning position. At the same time, keep some extra cash to buy any opportunities that may come at any moment.
6. Do not trade if you are not sure.
Many traders because of their daily habits trade even when there are weak signals to buy or short. Normally, such a situation occurs after a sharp rise or decline when stocks are adjusting their values. While some stocks attempt to move up, they may take a pause before the next move. Such a situation is often confusing. There is no harm in taking rest for a day or two or short period if the trend is choppy, unclear or doubtful, instead of putting your money at a higher risk.
7. Sell short, how many times you want to go long.
Over 90% of ordinary investors and traders are 'Bulls' by nature. Because they like to see prices move upwards only. The shares are purchased by individual / company / financial institutions and investment funds for incremental benefits. They have large holdings and mentally they wish and pray that this is the single thing that occurs in the market place. But the facts are different. History shows that Bull Phases are shorter than bear phases, so after all the actions that will rise again to 38%, 50%, and 66%. Since 90% investors are Bulls memory data is not normally beneficial to enter at higher levels than to enter later at lower levels but prefer to increase their portfolio at lower levels. Successful traders know how to take advantage of this correction. They are always ready to go "short" as often trade on the "long".
8. Remove some of your earnings.
Business Trading is excellent as long as you have a surplus. Unlike other business your losses can be unlimited and rapid if market does not move according to your expectations. While other companies you may have other remedies available commercially, but it is just to verify. Traders have large egos, especially after the series of successful operations and their tendency to enlarge the obligations of their confidence may cause significant economic slowdown. Therefore, it is suggested that the operator has to take some profits and put it in a separate account. It is an absolute necessity for long-term stability in the market.
9. Do not expect Profit for each transaction.
If you think you're a smart trader and can make money on each transaction, you are 100% wrong. Always be flexible and accept the fact that once you realize you are on the wrong side of the trade, Just leave the transaction without changing your strategy on the market and it can save you two losses.
10. You cannot follow the Rumors, they tend to ruin you sooner or later.
Rumors are a part of the game in the stock market. In most cases, these are spread by the interests of intermediaries, the media, analysts and other dealers of noise in the interests of a society long before their IPO, or to reduce or expand operations or business whatsoever. But instead of relying on maps that are translated copy of the price action of the certificates on the basis of supply and demand despite of the fact that even if you're lucky if you did make money on these "tips", but chances are 100% sure that you are likely to be caught in a false trap sooner or later if you trade in 'tips' or 'Rumors' which is a part of a well planned out strategy. Believing in the charts and act according to the charts. There is no second choice.
General Market Advice:
1. Never chase a stock.
2. Buy when markets are in the grip of panic.
3. Only buy fundamentally strong stocks, which are undervalued.
4. Buy stocks grown in top line and bottom line over the past years.
5. Invest in companies with proven management.
6. Avoid loss-making companies.
7. PE Ratio and Growth in earnings per share are the key.
8. Look for the dividend paying record.
9. Invest in stocks for sure returns.
10. Stocks have been the high yielding asset class over the past.
11. Stocks are an asset class.
12. The basic property of any asset class is to grow.
13. Buy when everyone is selling and sell when everyone buys.
14. Invest a fixed amount each month.
Source: www.capitalstars.blogspot.com
General Market Advice:
1. Never chase a stock.
2. Buy when markets are in the grip of panic.
3. Only buy fundamentally strong stocks, which are undervalued.
4. Buy stocks grown in top line and bottom line over the past years.
5. Invest in companies with proven management.
6. Avoid loss-making companies.
7. PE Ratio and Growth in earnings per share are the key.
8. Look for the dividend paying record.
9. Invest in stocks for sure returns.
10. Stocks have been the high yielding asset class over the past.
11. Stocks are an asset class.
12. The basic property of any asset class is to grow.
13. Buy when everyone is selling and sell when everyone buys.
14. Invest a fixed amount each month.
Source: www.capitalstars.blogspot.com
