A few good stock trading tips are always welcome, especially when they come from traders with real-life trading experience. What follows are 10 time-tested stock tips to help you succeed.
1 – To thy known self be true – Sounds like something from Shakespeare doesn't it? This simple tip is one that is often overlooked because when some traders look in the mirror they don't like what they see or are afraid of what they might see. Being true to yourself means knowing and understanding your strengths and weaknesses. This knowledge gives you power. While some may read this and say that it sounds like more of that self-help mumbo jumbo, nothing could be further from the truth. People lie to themselves about their trading like they lie about starting an exercise program to lose weight or a New Year's resolution, etc.
By telling yourself the truth you will be able to learn from your mistakes rather than just brush them aside and tell yourself, “Oh, I just had a bad day in the market.” If you don't do something that you are supposed to do own up to it and make sure you follow through and do better next time.
2 – Begin with the end in mind – This is a quote from Dr. Stephen R. Covey from his breakthrough book, “The Seven Habits of Highly Effective People”. If you have not read the book, I encourage you to go yo your local bookstore and buy it now.
Basically you shouldn't start any venture without some idea of what your goals are. Having a strong goal will pull you toward success, so focus on creating a strong goal for your stock trading. If you are serious about using stock trading as a vehicle to create wealth so you can buy your own private island then I say go for it!
3 – Have patience – Resist the urge to create your trading fortune in a day. In other words, give yourself the opportunity to develop the skill level necessary to succeed. Never try to harvest an unplanted crop.
4 – Make sure you have sufficient working capital
5 – Do not jump from trading strategy to trading strategy – If you have a good trading strategy stick with it and maximize your return on investment by continuing to make it work for you.
6 – Learn what to do before you do it – This is easier said than done because the sheer thrill of participating in the markets is sometime simply more than one can bear. If your goal is to be a long-term success use your enthusiasm to hone your trading skills.
7 – Always be mindful of your risk – It really is amazing how well you can do if you control your risk. Risk control allows you to stay in the game when things get tough. Staying in the game allows you to take advantage of the almost daily profit opportunities that are there waiting for you.
8 – Control your emotions – This is a tough one, even for some experienced traders. Admittedly it is tough not to shout “victory” from the rooftop when you are trading as if you can do no wrong. The opposite side of that coin is when you experience those periods when it appears that you can do right. Try to keep your emotions on an even keel.
9 – Understand that losing trades are part of trading – This is a tough thing for many new traders to get used to. It is so easy to get into a trade and then refuse to get out when it is time for you to cut your losses. When this happens a small loss can become a large loss. Large, unplanned losses will cause you to hesitate rather than to take action when you next trading signal comes along. In essence, you have then stopped using the system that has proven effective for you in the past. The end result could be abandonment of a perfectly good trading system. Believe it or not this is the reason that some beginners may badmouth certain trading systems.
10 – Have a stock trading plan – OK, so you have heard this a thousand times. If that's really true why don't you have a trading plan? A trading plan is your roadmap to success. How do you expect to reach your destination (income, wealth, etc.) without a map?
There you have it. 10 tips to help you succeed in the wonderful world of the stock market. Keep them handy and refer to them again and again and they will help to keep you on your path to profitable trading.
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