Stock Tips Used By Successful Traders

Here are some stock tips that you should use when deciding on your trading strategy. I think they will be very helpful. As always, your stock trading strategy should fit your own style.

You should always use money that you can afford to lose. One of the keys to successful trading is mental independence. You've got to be able to trade with a minimum of static or outside influencing factors, and that means that your trading freedom must not be influenced by the fear of losing money you really have a need for elsewhere. One trader has said that "The market place is not the arena for sacred money."

You should also know yourself. You need an objective temperament, an ability to control emotions and to handle your investment strategy without losing sleep over it. Your trading discipline can be developed but you also need to remove your emotions from what you are doing. There are many exciting things happening in the market each and every day but it takes a hard-nosed type of attitude and the ability to stand above the short-term circumstances, or you will be changing your mind at every little expected change of direction in the market.

Take the position that you will not hope for a move so much that your trade is based on hope. This rarely works the way you hope it might. When hoping that the market will turn around in their favor, beginning investors often violate basic trading rules and forge ahead blindly.

Decide on a basic course of action then do not let the typical ups and downs of the day upset your game plan. Decisions made during the trading day based on a price move or news story are usually disastrous. The successful traders will formulate an opinion before the market opens, then they will look for the proper time to execute a decision that has been made apart from the emotion of the current market. If you attempt to change direction during the trading day, you will get confused and may only help your broker due to unplanned trades.

A big suggestion is to not follow the crowd. Successful traders like their breathing room. Historically, the public tends to be wrong. Successful traders feel uncomfortable when their position is popular with the buying public, especially small traders. They feel that if 85% of the advisory services are bullish that it is an indication of an overbought situation. If less than 25% are bullish, this indicates an oversold situation.

You should definitely not be influenced by what others have to say. If you tried to trade based on each piece of advice, you would just end up being confused and wishy-washy. Once you have formed a basic opinion in the market direction don't allow yourself to be easily influenced. If you are not sure, then stand aside. The successful traders develop patience and the discipline to wait for the correct opportunity to find good stocks to buy.

You should watch the market or the particular stock trend. Be willing to trade on a breakout of the monthly range. When prices break out on the top side of the previous monthly high, it is a buy signal. When the break out is on the bottom side of a previous monthly low, it is a sell signal.

Never add to a losing position. No matter how confident you are never buy more stock as its price moves downward. This is only throwing good money after bad. Another rule is to cut your losses short. Be willing to liquidate at the first available moment if it looks like you have made a bad decision. Always be willing to go with the trend. If the trend indicates a downward turn, get out. You will end up making more money in the long run with this attitude. Otherwise you will only watch the stock price go down further and you will feel trapped. Believe me, I know the feeling.

I hope these stock tips will help you in establishing your trading system. The stock market is an exciting place to be involved in and many opportunities lie within its parameters.

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