It’s the dawning of a new year and you finally have some money to invest. Perhaps you just got a raise. Or, maybe an end-of-year bonus is burning a hole in your pocket. Either way, you need to be smart about investing if you want those extra dollars to count. Shutterstock The problem is, you have no clue where to invest your cash. While you’re aware of the myriad investing options available, the sheer number of possibilities is overwhelming. In the investing world, this is called “paralysis by analysis.” You spend so much time analyzing your options that you wind up putting it off and never investing at all. And eventually, the extra cash you set aside gets consumed by bills or unexpected expenses. In other words, life happens. 4 Investments You Should Absolutely Make in 2018 If you want to make sure your extra cash doesn’t disappear, you need to invest it right away. A certain amount of analysis is fine if it helps you find the right inv...
Your stock trading rules are your money. When you
follow your rules you make money. However if you break your own stock trading
rules the most likely outcome is that you will lose money.
Once you have a reliable set of stock trading rules it
is important to keep them in mind. Here is one discipline that can reap
rewards. Read these rules before your day starts and also read the rules 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 human nature to want to vary or break rules and it takes
discipline to continue to act in accordance with 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. Protecting your capital base
is fundamental to successful stock market trading over time.
Rule 3: I will cut my losses at 5% to 15% when I am
wrong without question.
Some traders have an even lower tolerance for loss.
The key point here is to have set points (stop loss) within the limits of your
tolerance for loss. Stay informed about the performance of you stock and stick
to your stop loss point.
Rule 4: Never set price targets.
This is a style that will allow me to get the most out
of rising stocks. Simply let the profits run. Realistically, I can never pick
tops. Never feel a stock has risen too high too quickly. Be willing to give
back a good percentage of profits in the hope of much bigger profits.
The big money is made from trading the really BIG
moves that I can occasionally catch.
Rule 5: Master one style.
Keep learning and getting better at this one method of
trading. Never jump from one trading style to another. Master one style rather
than become average at implementing several styles.
Rule 6: Let price and volume be my guides.
Never listen to any opinion about the stock market or
individual stocks you are considering trading or are already trading.
Everything is reflected 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 no excuse not to take it.
Rule 8: Never trade from intra-day data. There is
always stock price variation within the course of any trading day. Relying on
this data for momentum trading can lead to some wrong decisions.
Rule 9: Take time out.
Successful stock trading isn't solely about trading.
It's also about emotional strength and physical fitness. Reduce the stress
every day by taking time off the computer and working on other areas. A
stressful trader will not make it in the long term.
Rule 10: Be an above average trader.
Comments
Post a Comment