10 Rules for Successful Stock Trading
Rule 1: Always Use a Trading Plan
Having a set of rules on entry, exit, and money management & sticking to the plan is critical.
Rule 2: Treat Trading Like a Business
Don't approach trading like a Hobby or a Job but rather like a Business, with a goal to maximize returns.
Rule 3: Use Technology to Your Advantage
Use Charting platforms, algorithmic back-testing & mobile monitoring of trades to analyze markets & avoid missteps.
Rule 4: Protect Your Trading Capital
All traders face loss & hence avoid taking unnecessary risks & focus on multiplying wealth using the gains from trading.
Rule 5: Become a Student of the Markets
Understand the markets using focus and observation to sharpen your instincts and learn the nuances & accept it as a lifelong process.
Rule 6: Risk Only What You Can Afford to Lose
Use only expendable money for trading and never trade by taking debt or using money earmarked for other priorities.
Rule 7: Develop a Methodology Based on Facts
Facts & not emotions should be the inspiration behind developing a trading plan.This requires cool & calm state of mind.
Rule 8: Always Use a Stop Loss
Predetermine the amount of risk that you are willing to accept with each trade & don’t expose yourself to unreasonable risk
Rule 9: Know When to Stop Trading
There are two reasons to stop trading: an unrealistic trading plan, and an undisciplined trader. So ensure both are optimized on a regular basis.
Rule 10: Keep Trading in Perspective
Stay focused on the big picture while trading by keeping realistic goals & don’t get carried away by short-term loss or profit.
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