1) Always cut losses quickly (within 1-2% while aiming to win 10-20%) This is by far the BEST rule of the bunch!
2) NEVER average down. Why add more to the misery? Instead average UP (meaning he / she adds to a WINNING trade)
3) Support & resistance price levels are the two MOST IMPORTANT chart indicators
4) Trading without real time charting + Level-2 (A window which shows depth of real time bids + offers) you're already losing the battle before it begins (big no no)
5) It's tough to make $1,000 on 1 trade but much easier to make $100 for example (even if it's less than your 10-20% target win) Patience is key when building up a small account.
6) Nothing is worse than when you're winning on a stock only to let it turn into a loser. To avoid that you sell partial positions on the way up.... If you're shorting the stock cover partial positions meaning buying back partial positions on the way down
7) Keep your EMOTIONS out of the trade.
* Four Psychological States Of Emotion: Greed, Fear, Hope, and Regret.
Impossible to keep emotions out of trading, unless of course you are a robot. Proper trade sizing helps with managing emotions. Risk management = emotional management!
@Helmi91 i don't aim to make a dollar amount. The volume + volitility of a stock determine how much i risk, then i try to make 10-20%. As my post says tho, if the trade only makes $100 you take it instead of hoping / wishing. All the best in trading!
nice and simple couple of rules... i like it(Y) thank you
Thanks for outlining your trading rules. Any thoughts on charting and level 2 service? Will be starting with a very small account...probably Etrade or Suretrader. Monthly service costs for charting and level 2 may be an obstacle initially. Any recommendations?
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