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20 Trading Tips

20 IMPORTANT TRADING TIPS


General Trading Tips:

1. Avoid become emotional with your trades. Emotions are essential for understanding humans but not financial markets

2. At the point where fundamental analysis agrees with technical analysis, a good trade is born

3. Technical analysis is the king in short-term trades. Fundamental analysis is the king in long-term investments

4. Analyze charts and patterns and identify similarities over the past. Human behavior repeats itself so does a chart pattern

5. Timing is the key to successful trading –its much better to lose a trade than risking to trade the wrong timing (or the wrong direction too)

6. A high increase in volume or volatility usually signifies the change in a market trend. Keep focusing on volume activity and volatility changes either trading stocks or options or any other financial asset

7. Options Put-Call ratio can be a reliable market indicator in identifying major changes in the market's trend. Forex Traders can use the COT analysis to spot potential upcoming turnarounds


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Tips for Starters:

8. You must learn to lose before you can earn from trading

9. Implement always a stop-loss strategy (at least a mental stop-loss)

10. Be patient, learning how to trade wisely doesn't happen in one-day

11. Avoid trading using Capital Leverage more than 20:1 (pros usually don't use capital leverage above 5:1)

12. Learn from experienced traders (forums, books, seminars etc)

 

Short-Term Trading Tips:

13. If you trade on a daily basis, pick trades focusing on high volatility

14. Find the brokerage with the lowest commissions, –it is very important if you are a day-trader. You may use Rebate Plans as well

15. Even in the short-term, don’t forget to continuously diversify your trading portfolio risk. Do not allocate more than 5% of your capital on any individual position

 

Stock Trading Tips:

16. Follow the trend, 75% of all stocks follow the course of their general index

17. Avoid trading stocks at periods when the “Cash-is-King”

18. If the price of a stock is doubled (100% return) from its lowest point, probably it is a good time to sell

19. Usually, stocks of companies that are market leaders, trade above $20 as market-leader stocks usually perform better

20. No matter if you trade US markets or not, always keep an eye on Dow Jones Industrial and S&P 500. These two indices are very important to all other global indexes and markets.

 

 

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