Your stock trading rules determines your wealth. When you adhere to 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 consistent set of your own stock trading principles, it is important to establish them in mind. Here is one discipline that can reap lucrative returns. Read these rules before your mind is revitalized and also read the rules at the end of the day for self-check and evaluation.
Rule 1: I must follow my own rules.
Naturally, if you are the one that worked out a set of rules, they are to be put into practice. It is human nature to want to compromise or break the rules. Therefore, it takes upmost discipline to continue to act in accordance with the established rules.
Rule 2: I will never risk more than 3% of my whole portfolio on any one stock trade.
There are many old traders. There are also many bold traders. But there never exist 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. Always stay informed about the performance of your stocks and remain faithful to your stop loss point that you have decided long ago.
Rule 4: Never set price targets.
This is a popular approach that will allow me to get the most out of rising stocks. Simply let the profits run. Realistically, I can never pick tops. Never ever feel a stock can rise high during a period of time long enough till you feel comfortable with the earnings). Do not become greedy. Be willing to give back a good percentage of profits with great expectations and hopeful anticipations of much greater profits.
Usually, the enormous profits made from trading are the really BIG moves that I can occasionally catch.
Rule 5: Be proficient in just one style.
It is more than enough. Keep on learning and improve on this one method of trading that you have chosen. Never jump from one trading style to another. It is important to realize that mastering one style and become expert at using it is definitely better than becoming average at implementing several styles.
Rule 6: Let price and volume be my guides.
Never listen to any advice about the stock market or individual stocks that you are considering trading, or are already trading. Everything is indicated in the price and volume.
Rule 7: Take all valid signals that show up.
Do not find explanations for any different approaches that you may wish to take. If an entry signal shows up, you have no excuse not to take it.
Rule 8: Never trade from intra-day data. There will always be stock price variation within the course of any trading day. Depending on this data for momentum trading alone may result in wrong decisions.
Rule 9: Take time off to reward your worn-out self.
Successful stock trading is not exclusively about trading. As much as we do not want to shortchange ourselves by resting and earning less, we must pay heed to our emotional strength and physical fitness. You can reduce the built-up stress every day by taking time off the computer and do things that will satisfy your souls. A stressful trader will not make it in the long term.
Rule 10: Be an above average trader.
In order to succeed in the stock market, you do not need to do anything exceptional. You simply need to avoid doing what an average trader does. He/she is inconsistent and not focused. Ask yourself if you have followed your method today every day. If your answer is no, then you ought to reflect deeply and make an effort to recommit yourself to your stock trading rules.
If you are interested in stock market option trading or options made easy, please visit www.stockstradingstrategy.com to manage your risk and returns.
Once you have a consistent set of your own stock trading principles, it is important to establish them in mind. Here is one discipline that can reap lucrative returns. Read these rules before your mind is revitalized and also read the rules at the end of the day for self-check and evaluation.
Rule 1: I must follow my own rules.
Naturally, if you are the one that worked out a set of rules, they are to be put into practice. It is human nature to want to compromise or break the rules. Therefore, it takes upmost discipline to continue to act in accordance with the established rules.
Rule 2: I will never risk more than 3% of my whole portfolio on any one stock trade.
There are many old traders. There are also many bold traders. But there never exist 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. Always stay informed about the performance of your stocks and remain faithful to your stop loss point that you have decided long ago.
Rule 4: Never set price targets.
This is a popular approach that will allow me to get the most out of rising stocks. Simply let the profits run. Realistically, I can never pick tops. Never ever feel a stock can rise high during a period of time long enough till you feel comfortable with the earnings). Do not become greedy. Be willing to give back a good percentage of profits with great expectations and hopeful anticipations of much greater profits.
Usually, the enormous profits made from trading are the really BIG moves that I can occasionally catch.
Rule 5: Be proficient in just one style.
It is more than enough. Keep on learning and improve on this one method of trading that you have chosen. Never jump from one trading style to another. It is important to realize that mastering one style and become expert at using it is definitely better than becoming average at implementing several styles.
Rule 6: Let price and volume be my guides.
Never listen to any advice about the stock market or individual stocks that you are considering trading, or are already trading. Everything is indicated in the price and volume.
Rule 7: Take all valid signals that show up.
Do not find explanations for any different approaches that you may wish to take. If an entry signal shows up, you have no excuse not to take it.
Rule 8: Never trade from intra-day data. There will always be stock price variation within the course of any trading day. Depending on this data for momentum trading alone may result in wrong decisions.
Rule 9: Take time off to reward your worn-out self.
Successful stock trading is not exclusively about trading. As much as we do not want to shortchange ourselves by resting and earning less, we must pay heed to our emotional strength and physical fitness. You can reduce the built-up stress every day by taking time off the computer and do things that will satisfy your souls. A stressful trader will not make it in the long term.
Rule 10: Be an above average trader.
In order to succeed in the stock market, you do not need to do anything exceptional. You simply need to avoid doing what an average trader does. He/she is inconsistent and not focused. Ask yourself if you have followed your method today every day. If your answer is no, then you ought to reflect deeply and make an effort to recommit yourself to your stock trading rules.
If you are interested in stock market option trading or options made easy, please visit www.stockstradingstrategy.com to manage your risk and returns.
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