Market Watch
TRADING TIPS FOR BEGINNERS
25 October 2013 - 08:23 PM
- 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.
