Stock Trading Best Practices
Here’s a long list of stock trading best practices/rules (It lists 103 items but many are duplicated). Some of my favorites are:
- Losses are part of trading. Limit them, accept them and move on to the next trade.
- Believe That The Market Is Stronger Than You Are. Do Not Try To Fight The Market.
- Capital Preservation Is Just As Important As Capital Appreciation.
- Of All Speculative Blunders, There Are Few Greater Than Selling What Shows A Profit And Keeping What Shows A Loss.
- Prepare a trading plan and execute your plan.
- Always use stops to limit your losses!
- A successful trader is not afraid to buy a new high or sell a new low.
- Focus on improving your psychological components of discipline, patience, perseverance, and determination, as they are the keys to Investment Success.
- Following the trend is often the best path to profits.
- Self-control is a more valuable that trying to predict the markets.
- The Real Difference Between Winners And Losers Is Not So Much Native Ability As It Is Discipline Exercised In Avoiding Mistakes.
- Have You Taken A Loss? Forget It Quick. If You Have Taken A Profit, Forget It Quicker. Don’t Let Ego And Greed Inhibit Clear Thinking And Hard Work.
- Somewhere A Change Is Occurring That Can Make You Rich.
- If A Market Doesn’t Do What You Think It Should — And You Are Tired Of Waiting— You Had Better Be Out Of It
- The Most Profitable Trading Tool Is Simply Following The Trend
How many do you practice?
This post has 3 comments
June 19th, 2005
My general trading strategy is pretty much along those lines. I disagree with the part about buying new highs. I have always had a fear of buying at new highs, but I feel it is justified. I prefer to limit my trading to buying stock on a long term uptrend, that is also beggining a short term bullish m/a crossover (buying the dip). That is why I have a healthy skepticism of buying at the new high, I always feel a better entry point can be had. Patience *is* a virtue.
June 19th, 2005
Self-control is more important than anything else. How often do we make an emotional, not a planned decision that we regret? Even good traders do.
Self-control to take ‘professional losses’ and to hold on to winners is the most important, and most difficult part of trading/investing. Having an edge makes a difference though.
Great investors will share their methodology in books, seminars, columns, etc. because they know that we can’t do it as well as they can.
June 19th, 2005
Architect,
The buying at new highs thing could be taken to mean buying at or near new highs — not necessarily buying a breakout to new highs. I’d consider buying a pullback from a new high, with the expectation of the stock making more new highs to be ‘buying new highs’. The key to me is recognizing the trend and not doing what a lot of people do and sell new highs and buy new lows.
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