TRADING TIPS FOR BEGINNERS.
Do not expect to
become an expert day trader right away. It takes considerable time, practice
and effort to learn the ropes.
Paper trade or use a
simulated trading Web site to practice your trading techniques before you use
your own "real" money.
Eliminate the fear of
losing because "scared" money rarely profits.
Always limit your
losses - use stop orders.
Learn from your
losses - take advantage of each loss to improve your knowledge of the market.
Never allow large
profits to turn into losses. Consider selling if the market moves against you
by about 25% or so from your peak profit point.
If the markets on a
given day are not performing or reacting the way you expected, it is best to
simply get out.
Never add to a losing
position. It is a prescription for disaster.
Try to predict the
general direction of a stock price but do not try to pick tops and bottoms. You
will rarely succeed in accomplishing this.
Remember that
standing aside is a position and often the best one to take if you cannot form
an opinion as to where the market is heading on a given day.
The key difference
between winning and losing day traders is the ability to exercise discipline to
avoid mistakes or bad trading tactics.
You must subordinate
your will to the will of the market. The market is always right.
Always keep records
of your trading results and analyse the results.
Good day traders
generally sell into good news and buy on bad news.
Patience, perseverance,
determination and a rational trading plan are the key attributes of a
successful day trader.
Never get emotionally
involved with your trades as emotions often work against you.
Do not try to profit
on every trade. It is the total profit you make that matters not the number of
individual wins.
Learn when you can
rely on instinct as opposed to analysis.
Don't chase momentum
if you are unsure as to the exit point.
Assume the market will reverse itself
as soon as you open a position.
Be flexible. Remember
that different strategies suit different days and different stocks.
Decide each day how
much risk you are willing to take and stick to your decision.
Access to timely
information and fast execution of trades is essential to day trade successfully.
Subscribe to a good financial information service and open an account with a
Direct Access Trading firm or an online broker that caters to day traders.
Do not try to focus
on too many stocks at once. Limit your focus to a manageable number.
Always think positive
no matter how much you lose. Accept your losses gracefully, try to learn from
them and move on.
If you do not find
day trading fun or find it too stressful you will not likely be successful. Try
some other activity.
