Top Trader Mistakes
Rule #1 Don’t get greedy, take profits when you have them or at the required rate you specified to begin with.
Rule #2 Consider this stock solution: Don’t turn a trade into an investment, or vice versa. If the trade you have is failing- move on, don’t justify it by saying ” I will just hold it as an investment for the long-term”.
Rule #3 Cut losses quick. Always have your stop losses in and a pre-defined limit on which you are willing to lose.
Rule #4 Invest in best of breed, household names. Otherwise, a company with a poor track record can make your investment go to zero. Top beginner mistake.
Rule #5 Never catch a falling knife. It hurts. If a stock is going in the tanker don’t chase good money after bad.
Rule #6 Set your exit price for profit. Don’t just have a stop loss in. Stock Solution: when you have a gain don’t just let it run. In this market, gains can come and go at the flip of a hat because of how fast news travels.
Rule #7 At the same time, don’t cut your gains short. Do your homework. If the stock has a legitimate reason to keep moving higher, why sell when you put the time and effort into researching it and discovering it. Trading strategy on this one-keep raising your stop loss as it moves higher.
Rule #8 Buy in positions. Don’t buy all at once. It is arrogant of you to think that you can drop all of your money now and it work. Top beginner mistake when starting out to buy stocks. Leave room for it to fluctuate so that you can buy it cheaper and average your cost basis at a better price.
Rule #9 The last rule brings me to this rule, always buy near support or, on the moving averages to be specific. If a stock is over extended don’t buy it period. But, if it is near support, every pullback should be viewed as a gift from the trading gods, not as a reason to panic. ( Just make sure you put the stop loss in below the support lines).
Rule #10 Don’t panic. As long as your stops are in on your stocks, don’t get shaken out by the herd. If you do get stopped out, and the stock happens to snap back and go higher, you can always get back in. Here is your final stock solution for now: If you manage your risk to the downside, the upside will take care of itself.