Stock Trading Rules

Stock Trading Rules

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Stock Trading Rules

Your stock trading rules are your money. When you strictly follow the rules you make huge profits. However, if you break your stock trading rules the most likely result is that you end up with the losses.

Once you have to develop a reliable set of stock trading rules, it is crucial to keep in your mind. Here, discipline is an important factor that can reap the benefits. Please read these rules before your day starts and also read the rules in your day ends.

Rule # 1: I must follow my rules.

Naturally if you develop a set of rules, you are the first person to follow. It is human nature to want to change or break the rules, it takes discipline and you must continue to act in accordance with established rules.

Rule # 2: I will never risk more than 3% of my total portfolio on any one stock trade.

There are many old stock traders. There are many bold stock traders. But there are never any old bold stock traders. Protecting your capital base is fundamental to successful stock market trading for a long time.

Rule 3: I will cut my losses at 5% to 15% when I am wrong without question.

Few stock traders even do not tolerate minimum losses. The important point here is to have set points (stop loss) within the limits of your tolerance for loss. Stay informed on the performance of your stock and stick to your stop loss point.

Rule 4: Never set price targets.

This is a method that will allow you to get the most out of rising stocks. Simply let the profits to run. Practically, you never pick tops. Never feel a stock has risen too high too quickly. Be willing to give back a good percentage of profits in the hope of much bigger profits.

The big money is made from trading the really big moves that I can occasionally catch.

Rule 5: Master one approach.

Continue to learn and better at this one approach of trading. Never skip a negotiating trading approach to another. Master one approach rather than become average at implementation of several approaches.

Rule 6: Let price and volume be my guides.

Do not listen to advice on the stock market or individual stocks you are considering to trade or trading already. Everything is reflected in the price and volume of stocks that are trading in the market.

Rule 7: Take all valid signals that show up.

Do not make any excuses. If an entry signal shows up, you have no excuse for not taking it.

Rule 8: Never trade data using intra-day trading. There is always change in stock price within a trading day. Based on these data for momentum trading can lead to erroneous decisions.

Rule 9: Take time out.

The success of trade is not only about trading. It is also the emotional and physical strength. Reduce the daily stress by taking the time to the computer and work on other areas. A stressful trader will not make it in the long term.

Rule 10: Be an above average trader.

To succeed in the stock market, you need not do anything outstanding. Just do not do what the average trader does. The average trader is inconsistent and undisciplined. Ask yourself every day, 'Did I follow my stock trading method today? "If your answer is no, then you are in difficulty and it is time you review your stock trading rules.