WORDS OF WISDOM FOR THE DAY : Don't Get Greedy Or Feared, Let The Rules Not Your Emotions To Take Care Of Your Trades In The Stock Market....!

WORDS OF WISDOM FOR THE DAY : Don't Get Greedy Or Feared, Let The Rules Not Your Emotions To Take Care Of Your

Trades In The Stock Market....!

 

1) Learn to take a Profit When Market Signalled - As obvious as it may seem because let's face it, people only trade to make profits, hitting a trading target and closing the trade can be one of the single most challenging tasks a market speculator can face. We always hear about the emotions of fear and greed driving the markets and never is this more the case than when an individual is in a good strong trade and then sees it fall all the way back for a break even or small loss. Sometimes this will happen and I have personally had numerous trades fall short of their targets. As frustrating as this can be at times, I have also had plenty of trades that have hit their target perfectly and closed out for a great profit. All we can do is stick to our plan of action and don't let our feelings get in the way.

 

2) Learn to take a Stop-Out - As rudimentary as this rule may seem, it is surprising how many times it often takes a novice and even sometimes a seasoned trader, to realize that at no cost should this rule ever be broken. Once one has found the trade, marked off the entry and target and placed the stop-loss order, it should be set in stone. There was a phrase taught to me early on in my trading education which stated that my losses would always be far more important to me than my wins, and I have digested and lived by that rule ever since. I will always be the first to admit that taking a stop-out is difficult in the early days, mainly due to the feeling of being wrong. Combine that with the fact that you just lost a little bit of your money as well and it can be a bitter pill to swallow. However, we soon come to realize that losing small is a vital part of the game. If you don't have small losses, you can never have larger wins. Sure, sometimes you will take a stop-out, only to watch the trade go your way, but you also have to ask yourself the question: What if it had continued to go against me and I wasn't protected? How long do you think the accounts lasted of those people out there who bought previous lows and didn't protect themselves? Many people bought those lows, but only the professional traders who got out when they were wrong are still around right now. Take the stop on the chin and move on. Things won't always go your way in the stock markets, just as they won't always go your way in real life either.

 

3) Learn to take the Trade - You need to learn to take all of the trades which meet your plan! Essentially, this could be one of the most overlooked aspects of consistently successful trading I have ever come across. What most new traders make the mistake of doing is attempting to look at too many counters and then try to cherry-pick the best trades across the bunch. There is absolutely nothing wrong with looking for trades with the best probabilities going for them, but we also have to be very cautious about missing out on trades which met the plan and were not taken. Typically, when you attempt to cherry-pick, you end up picking the losers and not taking the winners! A simple solution for this outcome is to just divide your maximum risk across the board and get involved with all the stocks you are looking at, or simply, look at less counters and just focus a handful one. The very worst thing a trader can do is pass on a trade which matches their trade plan because they fear another loss. This can often result in passing on a quality setup which could have greatly turned the overall profit and loss situation around and impact the final results and consistency. The idea is simple: If a trade comes up which meets the criteria for the plan, then it must be taken; no questions asked. Remember that you have to be in it to win it. Passing on a trade opportunity due to emotional setbacks is not objective practice.

The above 3 rules may be basic in nature, but they can be powerful and effective in action. Let your rules be both easy to understand and simple to master and the rest will come with a little time and patience. I hope by sharing my own trading experience with you will helps your own personal trading journey in the stock markets go a little bit smoother and profitable over time.

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