Today's world is filled with discussions on how to make the most of your money. You'd even hear success tales of individuals who entered the internet trading world and quickly made a fortune. It's what an increasing number of homes are discussing: exchanging online courses for success is the next big thing. ABK Securities is one of the stock market broker for best trading practices.
Whatever you trade, the following are the 10 rules that everyone should follow:
1. PLAN YOUR TRADE AND THEN ACT ON IT. To succeed in trading, you must have a trading strategy. A trading plan should include a position, the reason for entering, a stop loss level, and a profit taking level, in addition to a strong money management technique. A sound plan with best stock market broker will eliminate any emotion from your trading.
2. TRENDS ARE YOUR FRIENDS. Do not deviate from the trend. When the market or a particular stock is bullish, it is prudent to go long. On the other hand, you short if the market is bearish which makes bear market trading hard. Never buck the trend.
3. FOCUS ON CAPITAL MANAGEMENT. This is the most critical step you must take when dealing with your trading funds. Your primary objective is to safeguard the capital. Never trade more than 10% of your assets in a single transaction. For instance, if you have a $10,000 portfolio, each trade should be limited to $1000. If you don't do this, you'll be out of the market pretty quickly. A stock market broker will always help you focus on capital management.
4. BE AWARE OF WHEN TO CUT LOSSES. If a trade goes against you, sell it and let go. Do not stick onto a losing deal in the hope that the price would rise. Almost certainly, you will lose more money. Prior to entering a trade, establish your stop-loss price, the price at which you must exit if the transaction goes south. The amount you should select for the stop-loss is determined by your risk profile.
5. MAINTAIN PROFITABILITY WHEN THE TRADE IS SUITABLE. Decide how much profit you are ready to accept before initiating a deal. When a trade proves to be profitable, take the profit. Profits might be taken all at once or in phases. You have nothing to lose after you have recouped your trading costs. Remain seated and see the profit run.
6. BE EMOTIONALLY INDIVIDUALIZED. In trading, the two most powerful emotions are greed and fear. Allow neither greed nor fear to affect your trading. Trading is a mechanical procedure that is not suitable for the irascible. As Dr. Alexander Elder stated in his book Trading For A Living, if you sit in front of a good trader and study how he trades, you may be unable to discern whether he is profitable or not. That is the emotional stability of a good trader. Best stock market broker keep your investment safe because they don’t act emotionally.
7. DO NOT TRADE ON A FRIEND'S OR BROKER'S RECOMMENDATION. Only trade after conducting your own research and analysis. Be a knowledgeable trader.
8. REMEMBER TO KEEP A TRADING JOURNAL. When you purchase a stock, jot down the reasons for your purchase and your emotions at the moment. When you sell, you do the same thing. Analyze and document your missteps, as well as the things you did successfully. By consulting your trading log, you may learn from your previous errors. Correct your errors, continue learning and continue growing.
9. IF IN DOUBT EXIT. When in uncertainty and unsure about the direction of the market or stock, stay on the sidelines. At times, doing nothing is the best course of action. Best stock market broker like ABK securities will help you exit safely.
10. AVOID OVERTRADING. Ideally, you should have between three and five roles open at any one moment. That is all. When you have an excessive number of holdings, you tend to lose control and make emotional judgments in response to market changes. Avoid trading only for the sake of trading.
These are only suggestive and not exhaustive. The list may go on, but this provides a good overview of several critical trading rules upon which traders should base their deals. These criteria may not result in amazing gains for you, but they may certainly spare you from the shame of large trading losses. That alone is incentive enough to adhere to these trading guidelines!