When traders are spending too much time analyzing the market, especially when applying technical analysis, they often forget about why this analysis is needed. After all, the main goal of any participant in the stock market is in the stock market basics: make money by selling expensive and buying cheap.
When a trader has a dozen technical indicators and chart patterns in his head, it is likely that some of them predict a fall, others – growth, and others – no change at all. A trader can get confused and misled by such information. (Do not think that I have anything against technical indicators and analysis, in some cases they can save the situation and make you lots of money.)
These are exactly the moments when you need to remember the basics of the stock market trading. Because all genius in this world is simple and there is no need to complicate the situation by a complex analysis and tens of indicators. Just try to look at the market differently with a fresh glance and apply the following rules for successful trading.
Despite the fact that the author of these rules is a famous investor and online trader Richard Rhodes, he took them from an unknown trader and passed them to the masses.
He himself, having many years of experience in online trading, also uses these rules. Some of the rules may seem too simple and obvious, but if you follow them correctly, you will beat the market.
10 Rules Of Successful Trading by Richard Rhodes:
1. The first and the most important rule: you need to stay for a long time in the rising market. This rule may sound like a matter of course, but very often traders close their positions after the price reaches its first maximum, thinking that the market has grown too fast and is probably overpriced. But as a result a trader loses profit, which would keep on increasing thanks to his patience and long-term investment.
2. Buy those stocks that show potential, and sell those ones that have no potential. It is interesting, but in many cases the crowd continues to buy stocks even if the price falls. A professional trader would buy a stock when the price is only starting to grow. The secret rule of survival in the stock market is not to buy low and sell high, but to buy expensive and sell more expensive.
3. Treat every trade, as the most important investment of the year. Make sure that you have weighed the risks and profits, and calculated your investment’s all possible outcomes.
4. Be patient if you missed a good time to place a trade, wait for the next correction.
5. Be impatient: the best loss is a small and short-term loss. Losing money is not that important as the loss of self control, which will torture you when holding a losing trade. Get rid of it.
6. Multiply what works for you. Check your portfolio and buy what brings you money, and sell those stocks that make you fewer profits or bring you losses. Optimize your stock trading.
7. Do not make a trade until the fundamental and technical analyses are in complete agreement.
8. If you have a serious loss, stop or pause your stock trading for a few days. After having some heavy losses, you are in a rush for regaining your lost money. This is not the right mood for trading as it may bring you to deliberate trading decisions. Relax, and return to the stock market trading with a clean and rational mind.
9. If you have a serious profit, trade aggressively to exaggerate those profits.
10. Market’s highs are formed under pressure and violence while the market’s lows are formed in a quiet and peaceful time.
As you can see, these 10 rules of successful trading on the stock market are very simple. They follow common sense, but as experience shows, it is very difficult to stick with them. Remember that the stock market basics are in your common sense and you don’t need the complex technical analysis in order to trade successfully.
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