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Trading tips |
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Tip 1: Trade with a plan
Set objectives before you trade. Define all outcomes - not only what you will do when it goes right, but what you will do if you are wrong. Determine the amount of capital you are willing to lose and conversely, define when you will take profits. Trade with a plan in order to overcome the emotional effects of trading.
Tip 2: Screen your trades
To select trading vehicles you must have a predefined method. Is your trading based on price momentum, trend, patterns and/or other techniques ? Choose a time frame, short or long term. Set your risk tolerance. Know what the liquidity is of your trading vehicle.
Tip 3: Look at charts
Look at a chart displaying the historical data long and short term. Determine the support and resistance levels. Is the intermediate trend flat, up or down ?
Tip 4: Trend Trading
Your probabilities of success can be greater if you stay with a definable market trend. A 50-day moving average represents a intermediate trend. A 12-day moving average a short-term trend.
Tip 5: Use Money Management
Cutting a loss quickly is the best money management you can have.
Tip 6: Be with liquid stocks and liquid markets
Stay with major markets and stocks with millions of shares in the float. Make sure the average trading volume is enough for you to sell all of your position on any given day. This will reduce the buy and sell slippage. Invest a small amount of cash, if you have, in start ups - and forget about them for a while.
Tip 7: Avoid „Hot Tips“
Just because something is in the news, or someone tells you about a stock, doesn‘t mean you need it too. Make up your own investment ideas and let the rest follow you.
Tip 8: Do not dollar cost average
If your timing decision was wrong, don‘t make the problem worse by trying to buy stock that is going lower.
Tip 9: Always use Stops
The proper use of Stops will protect profits and limit the losses. Look at Stops as profit and loss insurance. When you enter a trade, plan the stops along it.
Tip 10: Apply your self
Don‘t have time to do the homework ? If you are too busy to manage your money, stay away from trading. Rather invest the money then in a home you can sleep in.
Tip 11: Learn how to short stocks
When markets go down you can short stocks and still making money. However, it takes good know how in how to do it. Before you start shorting stocks, do the homework
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