10 Laws Of Stock Trading

By Author: Hugh
Total Articles: 4
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1) Never discuss your trades with non-traders. As well meaning as they may be, they will instill a fear, dispel your enthusiasm and uphold your optimism when you should sell. Frankly, they're not in the business and by definition, would not know any more than you do, or at least should.

2) Plan your trade and trade your plan. This involves 3 price points: your entry, exit and an escape route, should the market suddenly turn on you. Stick with it like glue. Never deviate from your plan. A failure to plan is a plan to fail. If you want to trade tomorrow and the next day, you need a plan.

3) Use limit, not market orders. The 'best available price' means something different to your broker than it does to you. Brokers can see the markets slighly ahead of you and can hold back your order long enough to make themselves the profits, at your expense. Always know what your trades will be.

4) Keep a log of your trades. Refer to it often, especially when things go awry. Determine why you lost and what were you thinking to let your funds vanish. Remember, if you lose 50%, you need to make 100% ...
... to break even. Documenting your trades will assist after the emotions have subsided.

5) Be ready to take losses. All traders lose at times, especially rookies. It's a normal part of the business. It is impossible to win at every trade. If anyone ever tells you they never lose, know that they are lying or are delusional. The idea is to control and minimize losses, learn from them and carry on.

6) Never take tips from anyone. If you did your work, you should know better than anyone what to trade. Tipsters, as well meaning as they may be, suffer a time lag. From the time they determine a trade, tell you about it, you receive and act on it, the trade could well be over and you lose.

7) Practise paper trading. Treat it like real money, not a game. If you lose, it's 'pretend dollars' but learn the mechanics, strategies and try to emulate the emotions as if it were real dollars. Fact is, real emotions will kick in when you convert to real dollars but at least try to get the feel of the trades.

8) Have a strategy. This is part of planning but more than that; invoke a proven strategy that fits your lifestyle, personality and time available. If your time is of essence, look at longer term trades, for example. This is not a 'one size fits all' game. Each needs to be customized. Explain it to a friend for commitment.

9) Be very careful in the first 15 minutes of trading. What they refer to as the 'amateur hour' does not reflect the true values as the market is getting settled from premarket and panic orders to be filled. Often times, markets will rise on the demand only to reverse for the rest of the day.

10) Continue to learn. A mentor who comes from the trenches can be invaluable. Ensure that he/she is honest, forthright and transparant. There is no other profession that you can get into with so little knowledge, make as much or lose as much as trading. Make education a part of your curriculum.

Need to discuss any of these points further? Contact me for a complimentary 'Introduction to Trading' webinar to see how I can help make you a better trader!


~ Hugh
www.estockoptiontrading.com
Personal training and mentoring