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.
After you’ve a trustworthy set of stockmarket trading rules it’s critical to keep them under consideration. Here is one discipline that will harvest rewards. Read these rules before your day starts and also read the guidelines when your day ends.
Rule one : I must follow my rules.
Naturally if you develop a set of rules they are going to be followed. It is man’s instinct to need to alter or break rules and it takes discipline to act as per the established rules.
Rule two : I can don’t ever risk more than three percent 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 toleration 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 stop-loss point.
Rule 4: Never set price targets.
This is a fashion which will let me get the most from rising stocks. Simply let the profits run. Realistically, I’m able to never pick tops. Never feel a stock has risen too high too swiftly. Be ready to give back a good % of profits in the expectation of much larger profits. The serious cash is made of trading the truly Large moves that I’ll infrequently 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 hear any opinion of the stockmarket 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 no excuse not to take it.
Rule eight : Never trade from intra-day information.
There’s always share price difference in the course of any trading day. Relying on this info for momentum trading can cause some wrong calls.
Rule nine : Take time out.
Successful securities dealing isn’t only about trading. It is also about emotional strength and physical fitness. Scale back the stress each day by taking time off the PC and working on other areas. A disturbing trader won’t make it in the long run.
Rule ten : Be a greater than average trader.
In order to achieve success in the stockmarket you do not need to do anything phenomenal. You 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 stockmarket trading rules.
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