5 Important MUST have Rules
Below are 5 important trading rules every trader must have.
1.) Preserve Capital- A lot traders forget this most basic concept. They often blow up their accounts, Loose more in one trading day than they ever made in one weeks duration. Stay focused and don’t forget that the key to staying in the game is having the capital to play the game. If you don’t make money “today” remember you have the opportunity the next day.
2.) Cut your Losses Quick- Why are you sitting there trying to convince yourself that you are right? When deep down inside your gut feeling is telling you to get out. Ha, you can’t control your emotions and just take the Loss, so you stay in the trade and that small loss now becomes a big one. Now you know that loss will take you a month to make up. You should have got out the first time when that self doubt came to mind.
3.) The three E’s- Enter, Exit and Escape- You should have a price in mind when you are entering a position as well as a profit taking target. Most important you should have an escape plan (stop in place) if the trade does not go in your favor-way in advance before you even placed the trade.
4.) Do not Chase- There is a huge spike in the stock and you think that you are missing out, so you get in. Crap, did this really pull back on me? You are down too much to get out, hoping that the stock recovers. There is no recovery. Now you are a Bag Holder. You did not anticipate holding onto the stock, you are worried, so you are checking every message board hoping that the catalyst are on your side.
5.) Do your own Analysis- Do not blindly follow someone else’s analysis just because the have a great track record. Make sure you understand and know how to perform proper due diligence. Take responsibility for your own ideas and action. At the end of the day, you have no one to blame but yourself.
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