In the stock market, you will need nerves of steel. You should know that most successful traders once in their careers lost everything. The price of one decision is either becoming wealthy or losing all. To trade responsibly, you should learn five rules every successful trader must know.
Successful Trading Rules
1. Your education requires investments.
Serious earnings in the stock market are the results of a long-term successful “work on the bugs” and lifetime education. When it seems to you that you know everything about the stock market, it usually means you have explored only a small part of it.
You do not necessarily have to be a master of economics, but without a fundamental understanding of the processes in the stock market, you are trading blindly. Specialized courses on the stock market are quite enough to start but never stop improving your knowledge.
Spend at least 5-10 hours a week to study new trading mechanisms on the market. Look for your winning strategy and make notes. Remember, investing your money and time in education, you get a winning result.
2. Develop a strategy for both entering and exiting the market.
You should determine the price of buying and selling shares, profitable for you during the current period.
As for the entry strategy – think how many shares you can afford to buy, and how many – at a time.
As for the exit strategy – decide at what price you will be profitable to sell shares, and what you need to achieve the goal.
Also, plan your emergency exit – it is equally important to determine the maximum amount of losses if your strategy won’t work out.
Carefully think out all three strategies and stick to them, despite the deceptive intent of quick earnings.
3. Do not skimp on your investments.
The nature of investment is such that large deposits lead to a decent profit. Do not be fooled by cheap things; such investments may be unreasonable from the very beginning. Buy only those shares, which value is confirmed by facts and economic forecasts. If the shares are just cheap, it’s not the reason to buy them.
At the same time, do not be discouraged when your shares may fall in price. Know that the value of each stock periodically falls and increases. Concentrate on the reasons for the fluctuations in price. Only understanding the causes will help you make the right decision.
It is important not to buy cheap and sell expensive but to buy expensive, and sell for a better price!
4. Avoid trading during periods of agiotage.
Do not panic – this principle works in any stressful situation, including trading in the stock market. Remember that the majority of expert opinions in media concerning stock prices are imposed by advertising and artificial creation of agiotage.
Take decisions only as a result of an in-depth analysis of the situation and making an independent decision. Stick to the strategy you developed earlier and be an expert in it.
5. Treat each transaction with understanding.
Keep in mind that every transaction can be both super-profitable and unprofitable. Conduct each trade operation consciously and write notes about your trading history. There you will celebrate your successes and defeats. However, mentioning the causes even more important.
Consider each share – whether it is worth to sell it right now or leave it for a better deal the long-term perspective. Be patient to the periods of falling prices. Remember: professional investors buy shares even at a growing price when it’s reasonable for them.
Remember: successful traders are those whose income exceeds losses. Trade profitable!