Ten Rules To Follow For Stock Market Trading Success

Stock market trading success

Undeniably, whatever your stock market trading rules are, they are also your money. Whenever you consistently follow your rules, you have undoubtedly made money. Nonetheless, if you do happen to break your own stock market trading rules, losing money will more than likely be the overall outcome.

Once you develop a reliable set of stock market trading rules, it is direly important to always keep them in mind. Here is one discipline that can reap rewards. It would be a good idea to habitually read and follow these rules before beginning your day, and again after your day is over.

Rule #1: Always Follow Your Own Set of Rules

It is generally common to develop a specific set of stock market trading rules that are to always be followed. It is naturally in our nature to develop a desire to deviate from, or even sometimes break these rules, even if they are our own. It will inevitably require consistent discipline to continuously act in accordance with the stock market trading rules that you do establish for yourself.

Rule #2: You Never Should Risk Over 3% of Your Total Portfolio on “One Stock Trades”

There are, and always will be, numerous veteran traders, just as there are, and always will be numerous daring traders. But one thing is certain, there have never been, and most likely never will be, any veteran daring traders. Additionally, it is truly fundamental to successful stock market trading over time, to always keep your capital base protected.

Rule #3: Whenever You Are Wrong, Always Cut Your Losses At 5% to 15% No Matter What

There are traders who will cut their losses at an even lower percentage. However, the most important point of stock trading is to always have determined “set points” (also referred to as a “stop loss”) within the limits of the loss amounts you are willing to sustain. Also, continuously keep yourself well-informed about your stock performance, and always maintain your “stop loss” point.

Rule #4: Set Price Targets Are Always a No-No

This specific stock trading method will allow you to always get the most out of rising stocks. Simply let the profits run. To be realistic here, you will never be able to pick tops. Additionally, you should not ever assume a stock has gone up too high, much too quickly. Always be willing to reinvest a decent percentage of your profits with positive anticipation of much larger profits. Do remember that the biggest monies are usually made from trading the really huge trading moves that you will be able to catch occasionally.

Rule #5: Make Sure To Master One Stock Market Trading Method

It is in your best interest to continue to learn and constantly hone this particular trading style. Jumping from one method of training to another is never a good idea. Mastering one specific method is undoubtedly better than becoming an “average implementer” of several different stock trading methods.

Rule #6: Price and Volume Should Be Your Guides

Price and volume reflect everything. Therefore, it is undeniably unwise to pay any attention to other peoples’ opinions about the stock markets U.S. stocks, or even individual stocks that you may consider trading or are actually already trading. Price and volume reflect everything.

Rule #7: Always Take All Valid Signals That Show Up

Making excuses is not an option. There is no excuse for deciding not to take an entry signal if one does happen to show up. If an entry signal shows up, you have no excuse not to take it.

Rule #8: Intra-Day Data Trading Is a No-No

By rule, within the course of any given trading day, there is, and always will be, stock price variation. It is undoubtedly unwise to ever rely on intra-day data for momentum trading. Doing so will almost always lead to poor stock market trading decision-making.

Rule #9: Remember To Take Time Out

Becoming a successful stock market trader is not only just about trading. Physical fitness and emotional strength also play an important role. Reducing everyday stresses by taking time off of the computer and maybe working on other projects is a good idea. Inevitably, if a trader is overly stressed, they most likely will not make it in the long run.

Rule #10: Become An Above-Average Trader

To be successful in the stock market, you do not necessarily have to be or do anything exceptional. Simply avoiding doing what the “average” trader does will usually suffice. Traits of the average trader include inconsistency and lack of discipline. Every day, you should ask yourself whether or not you followed your method. If the answer to your question is ever “no,” then recommitting yourself to your stock market trading rules is a definite necessity.