Stock Market Trade
The Key To Successful Stock Market Trade
By. Silvia
stock market
You may be a brilliant analyst; a perfect statistician; an economist with proven credits; a master planner appreciated in your circle. But when you enter the stock market, do so with a level head. Stock market has the tendency and capacity to beat the best brains of investing. You need to know certain core competencies and implement them at the right time if you wish to trade profitably.
Every time you invest, follow these time-tested rules to reap profits. These are golden rules because of the results they deliver.
1. The question is not how often you win; how you manage your risk is very important. Let this be part of your thought process. When your thought process is firm and is devoid of any confusion, your action process becomes result-oriented and gets profits for you. You may lose in five trades in a series. But you may wipeout the entire losses in the sixth trade and make a handsome profit, if you apply the principled approach. Soon you will find that more of your investments become winners, as long as you consistently and strictly control risk, and book profits.
2. Do not invest more than 2% of your account equity on any one trade. As for short-term investing, whether day trading or position trades do not risk more than 2%, of the equity on any one trade. You need to be in a position to control your risks consistently.
3. Know how to make the protective stops. There is always a tomorrow in the stock trades. If you do not honor the stop loss limits set by you, chances are that you will end up in losses. You will never make money on a regular basis at the exchange with such an approach.
4. The timing of entry and exit of trades is very important. As controlling the risk through small, predetermined amounts is important in successful trading, it naturally means that the timing of exit is important in your trades. Take on the possibility of loss well in time, before the loss phenomena completely overpowers you. When the market forces are favorable to the investors, the initial stream of profits may enthrall you. But always remember that the 2% rule is critical and fundamental to the trade.
5. Ignore the confusing ‘press statements’ and other streams of share literature that promise you the moon. Trend has nothing do with the news; news has everything to do with the trend. News is the consequential outcome of trends.
Once you have chartered your investment program, by truly understanding the share market discipline, the chances of your success are bright. When in doubt on any issue, do consult a reputed broker. His expertise and experience will add to the strength of your decision-making.
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