The ideas described here are not new ideas, just common sense that comes from years of observation and trading. No trade set up is 100% accurate, therefore no rule in trading is 100% accurate. Just remember to ALWAYS use stop losses when you trade to ensure any loses are minimal!
The rules below should be used to help you make more informed decisions when trading:
- Protect your profits by using stop losses/ trailing stop losses.
- Trade more than one stock and try and diversify your portfolio across different industries.
- Never trade on impulse or rumours! Although you can be ecstatic when your trades are up if you don't use reason and research then an impulsive trader is always one trade away from giving their profits back to the market.
- Never risk more than 2% per trade. By setting your stop loss at 2% it would take 20 consecutive trade losses to lose 20% of your capital. 3%=30% loss, 5%=50% loss and so forth.
- Use both technical and fundamental analysis when investing. Fundamentals are good to see how the market is doing as a whole whereas technical analysis provides more details on best entry and exit levels.
You should use Trade Fundamentals as a basis for your fundamental analysis whilst using your research links for further investigation. Just always remember to do research on the stock you are interested in investing in to ensure it is right for you.
As always if you have suggestions or questions please feel free to comment below.