Overview
Sometimes a review of some
basic trading tips/concepts
can help. To start off the
new year we will go over
some great common sense
tips to trading.
Tips:
1.
Trade with the trend! By
trading with the trend,
the trader should be able
to reduce the amount of
risk to their investments.
There is more risk when
buying a down trending issue
while there is less risk
trading an up trending issue.
When you find a stock you
are interested in, and it
is down trending, it is
advisable to wait until
your entry conditions are
met.
The
idea is simple: don't fight
the market, the market will
always win.
2.
What trend are you trading?
Knowing what trend (whether
short term -> long) you
are trading is extremely
important. This influences
which indicators and parameters
will work for you.
3.
The size/price of company.
When you are building your
trading system you should
set limits as to the price
and size of company. For
example: companies which
trade at less than $1 will
require different indicators
as well as fundamental research
versus trading an index
or a $100 stock.
3.
When you have a tip or a
stock you are interested
in, it is always good advice
to check the chart, relevant
industry indexes and learn
about the company before
making any decisions. The
point here is to do your
homework.
4.
Are you new to trading?
Then PRACTICE before you
play. If you are new to
trading, create a spreadsheet
or use a portfolio manager
to create a paper trading
system. There is no substitute
to actual experience, don't
risk your capital learning.
Act on your entry conditions
and exit conditions in your
paper trading system. DO
NOT cook your books when
you make a mistake, learn
from it.
5.
Do not make emotional decisions;
you must be confident in
your rules. If you make
a mistake, analyze what
when wrong and correct your
rules for the next time.
When your exit rule is met,
you must exit, if you make
a mistake, correct the rule.
Do not make it emotional,
this is where most mistakes
are made.
6.
When building an entry and
exit strategy, the most
important aspect is that
it will work for you. Just
because it works for someone
else, does not mean it will
work for you.
7.
Good company knowledge (balance
sheets) and relevant industry
knowledge/indexes always
helps and should be studied
as well. Investing in good
companies reduces your risk.
Having good entry and exit
rules makes you a more profitable
trader.
8.
You can never learn enough,
keep studying, everything
you learn and read will
make you a better trader,
whether you apply the information
or not.
9.
Test new ideas or systems
yourself, on paper, before
you apply any new techniques
to your investing system.
This type of experience/practice
is invaluable.
10.
No system is perfect. Have
a stop loss system as well
as a diversified portfolio
to absorb your losses and
leave you with an overall
profit.
ChartFilter
Tips
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Have a look
through our index lists and we are sure
you will find something new for your trading
strategies.
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Jones - NYSE
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