Rules of Trading and Investing
1. Have A Plan
Before you trade, think about all the possible outcomes. What will you do if you're right (when will you take your profits) and what will you do if you're wrong (how much are you willing to lose)? Take your emotions out of the trade and stick to your plan. Many traders fail because they hold onto a losing trade.
2. Trade The Current Trend Direction
Do not try to guess the bottom or top: Don't jump in front of a bus and don't catch a falling knife. Trade the current trend direction and keep an eye on price momentum. Consider factors, such as liquidity, sector rotation, and technical factors when screening stocks.
3. Use Technical Analysis To Time Your Trades
First, look at the big picture (one-year trading range). Figure out what the trend is, and as stated before, never trade against the trend.
4. Money Management Is Key
Don't fall in love with a certain stock. Cut losses quickly.
5. Ignore Hot Tips
Always do your research and due diligence.
6. You Will Have Losing Days
It is impossible to win 100%. Losing is just a part of the cost of doing business.
7. Trade With Confidence
If you have done all your research and analysis AND have a plan in place, you should be trading with confidence.