After you learn how to start stock trading, you must follow your rules, and your rules are your money. This implies that if you break your stock trading rules there is a higher propensity that you will lose money.
After setting your stock trading rules, it is ideal to keep them in mind. Ensure you read the rules in the morning before you walk out of your home and night before you retire to your bed,
Rule 1: Make your rules a must to follow
It’s understandable that the reason you set rules is to follow them, but human nature will want to break these rules. It takes special discipline not to succumb to the human nature and to follow the set rules.
Rule 2: Never risk more than 3% of your overall portfolio on any stock trade
We have both bold and old traders, but what we don’t have is old bold traders. Your capital base is very important and it must be protected to have a successful stock market trading.
Rule 3: Cut your losses at 5% – 15% when you are wrong without any question
Quite a number of traders have reduced tolerance for loss. The idea behind this is, within your limits of tolerance for loss you should have a stop loss point. Ensure you always keep yourself informed concerning the performance of your stock and as well keep your stop loss point in mind.
Rule 4: No price targets
Try to never set price targets reason being that it will allow you get the most out of the stocks that are rising. Never be too quick to judge that a stock has risen too high, but in the hope of much bigger profit be willing to give back a good percentage.
Rule 5: Be a master of one style
Concentrate on one method of trading, acquire knowledge about the method. Do not jump from one style of trading to another but instead be a master of one style. This is even better than being average in many styles.
Rule 6: Allow price and volume guide you
Disregard any opinion about the stocks you are considering to trade, allow everything to reflect in the price and volume of such stocks.
Rule 7: Take all valid signals showing up
If an entry signal shows up, always try to take it. Do not come up with excuses.
Rule 8: Avoid intra-day data trade
In any trading day, stock price variation will always occur. To avoid making wrong decisions, do not depend on this data for momentum trading.
Rule 9: Take time out
Physical fitness and emotional strength are just as important as having a successful stock trading. Take a time out and work on other areas of your life or spend time with loved ones to reduce stress because in the long run, a stressful trader may not make it.
Rule 10: Rise above an average trader
To have a successful stock market trading, you do not necessarily have to be exceptional but you just must not do what other average traders do. An average trader can be undisciplined and as well inconsistent, ask yourself if that is also what you are. If your answer is yes, then you need to go back to your set stock trading rules.
Also read>> Home Selection Creteria