When it comes to stock trading, there are certain rules that you must follow. If you do follow those rules, you will suffer fewer losses and you will become successful in a short matter of time. You can and you will make decent amount of money if you follow these stock trading rules.
1. Cut your losses
Losses can leave you emotionally miserable as well as financially devastated. Never let losses get out of hand. If you want to be successful, you need to keep your losses in check. This is the first rule of stock trading. If you can talk to a couple of successful traders, they will say that cutting losses was the major thing which made them successful.
2. Let your profits run
You will not always end up with a big profit. So when you do hit the jackpot, make sure you make the most of that opportunity. Try to maximize your profit whenever you can. Some trades take time to develop. Be patient and bide your time. When the moment is right, sell of your shares and you leave with a good amount of profit. This is another rule that goes hand to hand with the first rule.
3. Go with the trend
Always remember to follow the current trend in the stock market. Listen to people, discuss share market with them and try to read up on expert analysis. There is a reason the trend have formed and people are hooking with it. Nobody ever made a fortune by trying to standout. Not in the stock market anyway.
4. Don’t over trade
Sometimes you will see people buying shares and selling them on the same day. They are always buying and selling. Don’t do that. Don’t trade just for the sake of trading. If you think you have a stock with a potential to sell at a higher price then keep hold of it. Don’t fight your instincts. If you feel that the conditions and the timing is not right, then do not sell or even buy the shares.
5. Don’t buy cause its cheap
This is a very important rule that most people fail to follow. A lot of people will buy shares because they are cheap. There is a reason these shares are cheap and that is because they have shown no potential growth. Always invest in shares that have a potential to grow. This way you can always sell them off when the price is right.
6. Keep your positions small
Risk management is a key feature of stock trading. You do not want to risk everything in the hopes of making big money. If you fail, you will end up with literally nothing. Therefore you should use a good positioning model. This will help you keep track of where you are risking your assets. It also helps you to spread out your risk across various projects so that you do not end up losing everything.
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