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Educational Post: "Trading Stocks"

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trader53 Member Level  Friday, 06/15/12 06:45:24 PM
Re: trader53 post# 1187
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Educational Post: "Trading Stocks"

There are a couple of rules you must live by
if you wish to be profitable in trading stocks.

> Always take profits on the way up.
Secure your gains!
It’s not money in the bank until you sell.

> Trust your gut instinct,
if something feels wrong it usually is.
It’s much better to take a 5%-10% loss
than to eat a 50% loss
because you “hoped” it would bounce back.

> Know your exit strategy before you even buy it,
set a goal and achieve it.

> Where Do I Want to Get Out?

Why, you may ask, would you want to set a take-profit point, where you sell when your stock is performing well?

Well, many people become irrationally attached to their holdings and hold these equities when the underlying fundamentals of the trade have changed.

On the flip side, traders sometimes worry and sell their holdings even when there has been no change in underlying fundamentals.

Both of these situations can lead to losses and missed profit opportunities.

Setting a point at which you will sell takes the emotion out of trading.

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