written by Farazila Abu
Sticking to your stock trading rules will definitely be rewarding in the long run, it is a discipline that can help you reap huge profits. So read these rules before you enter the stock market and read the rules even when you leave with lots of money in your pocket
Rule 1: Don't break the rules.
It is natural if you to want to break or change your own rules and it takes a lot of discipline to follow your own set of rules.
Rule 2: Don't risk more than 3% of your total portfolio on any one stock trade.
There are many old traders and there are also many bold traders but there are never any old bold traders. Protect your initial capital is important if you want to trade stocks successfully.
Rule 3: If you are wrong, cut your losses at 5% to 15%
The most important rule here is to set stop loss points and minimize your losses if your predictions went wrong. Stick to your stop loss point and keep in touch about the performance of you stock
Rule 4: Always set price targets.
Don't be too greedy and try to get the most out of rising stock price. When you have reached your target profit margin for that day, pack your backs and leave. A stock price can rise too high too quickly and also can drop too drastically.
Rule 5: Master one style.
Keep learning and practicing at the one method of stock trading style that will relate to you the most. 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 speak for itself
All the important information about that particular stock is reflected in the volume and price. Many people will give you lots of opinions about the stock that you are planning to trade or currently trading, stick to your instincts and the skills that you have learned and don't listen to them
Rule 7: Take that valid signal
If you see a valid signal of a stock, take it!
Rule 8: Do not use the intra-day data to trade.
During any trading day, you will be able to see a stock price variation. If you rely to much on this data, you will end up making all the wrong decisions.
Rule 9: Relax
Successful stock traders are fit and you also have to be strong emotionally. Taking time off the computer and relax will help you reduce the stress of trading. An unsuccessful trader is a stressful trader.
Rule 10: Be an exceptional trader.
Don't try to do anything exceptional if you want to be successful in the stock market, instead, be an exceptional trader. Exceptional stock traders are consistent and disciplined. After you are done with the stock market for the day, ask yourself "Did I follow the rules?" If your answer is yes then you are on the path to stock trading success for a long long time to come.
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