Stock Trading Rules


by Kent Pinkerton - Date: 2007-01-30 - Word Count: 319 Share This!

There are a number of stocks trading rules that investors have to keep in mind in order to make rational investment decisions and avoid losses. One important rule for investors is to trade with capital they can afford to lose. It is highly advisable not to deal out more than 5% of the trading capital to make a single trade and to keep losses at the sleeping level.

Developing a game plan or a trading system is also a stock trading rule. This trading plan should cover how investors make their investment decision, and they have to implement the trading plan with risk management such as when to cut losses. Testing the strategy before risking funds is an important rule. Investors must paper trade with the indicators/trading system they are using with daily data. It is very essential for investors to keep their trading system easy and master only one of two investment methodologies or strategies.

Another stock trading rule is to analyze the markets when they are closed. Investors are advised to only study the markets after trading hours and determine their plan before the market opens.

One very essential stock trading rule for investors is to take time off when they experience sharp losses. They should not let the urge to win the money back take control over them and throw more money into the bad trade as this can double up losses and create more trouble. It is also extremely necessary to get a good mentor who is currently doing what investors want to do and they are in fact good at it.

One stock trading rule to be kept in mind is that greedy use of margin can double losses in place of doubling profit. Investors have to remember that they are in the stock market to trade for money. If the investment decision made by traders are wrong, they are advised to cut lose and not trade further.


Related Tags: stock trading, stock trading systems, online stock trading, option stock trading

Stock Trading provides detailed information on Stock Trading, Online Stock Trading, Option Stock Trading, Stock Trading Systems and more. Stock Trading is affiliated with Swing Stock Trading.

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