Kinetic Trader

Stock Trading Tips

I realize there are millions of articles out there about every concievable thing related to trading but here are some tips that seem to be universal across most trading  methods and will help to keep you focused on the basics if you become distracted from your trading strategy:

• Cut your losses. Just do it. I know it is hard to sell losers but if you have a defined sell point when you are buying a stock then you will be less emotional. Use limits/stop orders if you think your emotions will sway you from selling.
• Always evaluate the risk/reward before buying a stock. Don’t just but a stock because you think it will go up and have no perspective on where you will start taking profits or cut loses. Know support and resistance for a stock before buying.
• Keep a journal or record of your trades. This will help you learn from mistakes and it’s much easier evaluating your trades after the fact when you no longer have emotions/money involved. You will probably not progress very much or improve your trading if you don’t track your results and constantly evaluate your trades.
• Keep your position sizes at a manageable level so you don’t get emotions involved. This goes back to risk/reward mentioned above. By measuring the risk you will know how much money you are willing to lose on a trade and adjust the size of your trade accordingly.
• Understand at the beginning what your strategy is. Don’t randomly try a new trading strategy without having a good understanding of what it is all about because if the strategy for example experiences drawdowns then your emotions will cause you to start changing from the defined plan/method.

Ok, that is all for now.

Related posts:

1. Stick To Your Trading Plan