In stock trading business, there are many situations when knowing what to do that is more important than how hard you try. If you put your knowledge to work for you, success is never far away.
Choose your trading style
Think about what kind of stock trading you want to do. Some investors prefer day trading, in which every trade is closed out at the end of the day, while others do short-term trading, where you have several trading days at your disposal. To some being a weekly trader appeals more than monthly trades. In reality, it is never late to change your mind, but having at least some vague ideas before you start will be helpful.
Learn to Cope with Losses
The first think you need to learn is how to lose. As a beginner investor, you will sooner or later have to deal with losses in greater or lesser extent. However, you have to take care to always cut your losses before they reach 8% of your purchase price.
Investments to Avoid
Some equities like futures, options, foreign stocks and over-the-counters are highly volatile, so they are not recommended, especially for start up traders. You should focus on purchasing several, good-quality stocks. At the end of the day, they will worth more than a mass of cheap ones.
Practice Low Low-Risk High-Reward Method
Risk is an inseparable part of stock trading. Before they learn how to win on long terms, many investors deal a serious blow to their trading account. Up and running investors will tell you that risk management is crucial for successful trading, albeit not as glamorous as some other aspects.
Know When to Get out
While purchasing stock is important, even more important is to know when to sell. Equities don’t worth dime until they are converted to cash. If you neglect your stock, the value may disappear in no time. By planning ahead before our go in, you can always know the details that will indicate that’ its time to call it a night.
Hone your Winning Edge
A set of favorable factors that separate men from the boys in the world in stock trading is called a “winning edge”. Trading online and making continual profit requires a reliable advantage, for example knowing who the market makers are. They are in control of supply and demand, and can influence the trading environment directly.
Implement a Market-Proof Trading Method
The nature of stock markets makes it go up and down, sometimes in months’ or years’ intervals. You should elaborate an online stock trading approach that allows taking advantage of both down-markets and up-markets.
Trade the Best Stocks
Selecting healthy stocks takes time to master. Unless you have skills of an experienced trader, or tools for extensive research, the safest tactics is to ask for a professional advice. Flashy brokerage firms and mutual funds are best avoided, because reports have shown that their “experts” aren’t as successful as they are advertized.
Importance of Online Stock Trading Education
I was astonished to find out that around 9 out of 10 investors believe that they have above the average winning chances, but actually more than 80% of them lose money. Much of that margin can be contributed to the lack of specific information and proper education. If you think you are one of those self-educated successful brokers, well, lucky you.
Your Trading Style Needs to Match your Lifestyle
It’s hard to succeed if your trading style choice and your lifestyle are mismatched. If you are a day trader, you will sit long hours in front of the screen. On the other hand, long term online trading requires less attention, but it is not as intense.
Don’t get discouraged by initial failures. Learning to trade with merit doesn’t happen overnight. Concentrate on quality stocks, and don’t get to emotionally involved. Establish your rules and stick to them. Look up to winners, and draw from the experience of losers.