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Taking a position in a stock and watching it move in the direction as intended is in a lot of ways more fulfilling than the money received.
A fundamental pursuit is developing habits as necessary to duplicate consistent results.
Skillful traders know how to make money no matter which direction the market moves.
What's most important for any trader is having a market to trade -- and there are many.
From stocks to currencies and perhaps many other exotic instruments in between the successful trader is armed with three key defense mechanisms which help avoid costly mistakes.
1.
Clear your mind -- free yourself from all distractions, hopes, fears or superstitions The weakest link in any trading system is -- You.
People bring all sorts of unhealthy thoughts into their trading.
If you're sick, angry or otherwise emotionally imbalanced you will do yourself a favor by taking the trading day off.
Traders interested in realizing solid results should take heed to this advice.
Approach trading as an activity which you have no control over.
The market doesn't know you exist.
I doesn't care how much money you make or lose -- it's just what it is.
As a participant you'll be wise to suspend all emotional hang ups while engaged in trading the stock market.
2.
Know your exit -- set your target(s), where you want to close the position before you get in What's perhaps more important than setting a target for profitability is determining beforehand what you're willing to lose on a trade.
Oftentimes traders negotiate with themselves while in the trade and end up losing more than their trading plan calls for.
The whole purpose in trading is to make a profit.
Seldom are traders correct 100% of the time, therefore, mistakes are inevitable.
Knowing when to cut losses relative to profits gained balances out as profitable returns long term.
If research shows your average gain is 3-5 points then it's reasonable to conclude you shouldn't lose more than that on any given trade.
3.
Only trade stocks when they're moving in the direction of the long term trend Monthly and weekly charts serve as an excellent visual depiction of market direction.
Simply imagine looking at the price bars from left to right.
If they are climbing -- bottom left upward toward the top right corner, the trend is up.
If prices are declining -- top left downward toward the bottom right corner, the trend is down.
The longer the time frame of the trend the more reliable it is to show price direction.
The time invested researching stocks with a high probability of moving in the direction as indicated by the long term trend is well worth the effort.
A trader only needs a handful of stocks to trade frequently in its long term direction to make money.
Success breeds confidence and confidence helps traders stay in positions longer building substantial profits.
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