7 Wise Stock Market Investing Rules
It would be foolhardy indeed to embark upon any exciting adventure without the proper equipment and tools of the trade. Stock market trading is exactly the same.
The reason why most tend to fail is because they are ill equipped or have simply ignored sound advice. Arm yourself with the correct equipment to do the job properly and you will be on the way to capture many a prosperous trading opportunity. Here are 7 recommendations you would be wise to follow:
1. As a good rule of thumb, never expose more than 5 percent of your trading budget to any one trade. This way, if one trade goes against you, your losses are kept in check and you can still trade on another day.
2. Unless you are a highly experienced trader, you would be most unwise not to use a Stop Loss. Simply, this is an insurance against potential large losses if you trade goes against you
3. Emotion. There are two emotions playing a hard game in the stock market, they are greed and fear. You need to harness and these two emotions within yourself. You may think this is not possible, but you can, and must, educate yourself.
4. Do not follow the crowd. I strongly advise that you do not trade on the recommendations or tips of other people, even if they are you best friends. By all means use advice or reports as research, but ultimately it should be your decision, based on you judgement.
5. Don’t trade on borrowed money. Never open a trading account or trade using a loan or credit. The idea is to end up trading with the money of other people, in other words, from the profits you make from successful trades you make.
6. Plan your trade & stick to it. You will find a trading strategy with which you are happy. Honestly you will. I did, and so did every successful trader. Once you find it, study it and paper-trade it first, in other words, practice using a dummy account.
7. Ensure you educate yourself properly. The biggest reason for a trader losing in the stock market is because of lack of knowledge. They fail to educate themselves properly, hastily jumping in where sound knowledge fears to tread.