My Rules for a successful trader

Bencat

Trading is a game to bet on probability or odds.  The results from this game are

1, big profit
2, small profit
3, small loss
4, big loss.

So to be a successful trader, you have to like your small loss so that you can take your loss quickly in order to avoid the big loss.  In the long term run, if you can avoid #4, and have #1 to #3 results, you will be winner in this game.

Newsletters, investment advisers and various software programs may claim they've found the Holy Grail.
But when it comes to trading, the key to success lies within us. It is the ability to master trading rules, avoid big mistakes and continue to learn that will have the biggest impact on your portfolio. Here are key tips to success:

• Cut losses short. The primary reason people lose money in the stock market is that they don't cut their losses.
Entry level is a key for you place your stop loss.  If you always buy a stock within 3 to 5% range above the support level, you can always sell a stock if it falls 3-5% below the support level, which can help you to avoid large losses. This is one of the hardest things for people to do, because it means having to admit they're wrong.

• Manage your trading risk.  Trading always go with risk.  According to your available trading fund, you should use only 10 to 20% of the fund for one trading.  Don’t use more than 30% of your fund for one bet.  

• Follow buy and sell rules. Buy quality stocks with top fundamentals as they break out of sound bases. Use charts to spot the proper buy and exit point.

• Don't bottom-fish. A corollary to avoiding cheap stocks is this: Don't buy stocks falling in price or coming off their 52-week lows.
Trying to buy a falling stock can have the same effect as trying to catch a falling knife — you're liable to get hurt.

• Practice patience. The hardest thing for investors to do is sit on their hands and wait. Investing is a long process.
Legendary investor Jesse Livermore said it is never your best thinking that makes big money. It's the sitting.

• Control your emotions. Look at stocks objectively and don't let emotions guide your decisions. Be aware of your emotions, because fear and greed can cloud your perceptions.
Avoid basing decisions on somebody's opinions or because of something you know. Most big winners are new companies that haven't even been mentioned on CNBC.

• Learn from your mistakes. Successful investors often start by getting a degree in losses. Do a post-mortem on both your losing and winning trades and take a lesson from each. Do you have any bad habits? What are you doing to change your behavior? Stock investing takes years to learn to do right.  No quick money to make in the stock market!

Share with HTers in the challenge new year -2010!  Happy Trading in 2010 for every one!

soulvirus

你遵守了没有先？

whzdf

风信子

纽约的鱼

not that simple.
我觉得最重要的是搞对trend. 这个对了you can do no wrong. Otherwise, only DT.

coexist

good principles but hard to perform