Top 10 Trading Tips For Investors

 

 

 

 

 

 

 

 

Here are my top 10 trading tips for investors… enjoy!

Keeping Your Money Safe

1. Trade What You Can Afford

“Never trade with your life capital.  Every single trade has an element of risk and you should be prepared to lose what you invest.  Only trade what you’re willing and able to lose.  And before exposing yourself to that risk, spend some time practicing so you know what to expect.”

2. Have an Exit Strategy

“You have to know when you are going to get out before you enter the trade.  The exit strategy of any trade is the determining factor of the outcome.  For me, I simply want the stock to make a ten percent move from my point of entry.  That’s very achievable, and that’s the strategy I teach now.”

 3. Have a Stop-Loss Order

“Even when you are trading within your means, you have to make sure you are protected.  Use a stop-loss order to preserve your capital.  A stop-loss order is a very simple thing.  It’s an automated order to buy or sell once the price reaches a point that you aren’t comfortable with, so you don’t keep losing money on your investment.”

 4. Know the Risk

“It’s very important to know how risky a trade is.  Once you know the risk, you know how much you want to risk.  That’s called money management, and money management in trading is everything.”

5. Be Pro-Active About Learning

“When I first started teaching, I met many people who had sustained losses on the stock market and so were interested in becoming educated about trading.  I think they were doing things backwards.  You first have to be educated, because an informed investor is a smart trader.  You don’t just put money on the line and hope for the best.”

Putting Your Money to Work

 1. It’s Always a Good Time to Trade

“People frequently ask me when is a good time to trade.  My answer is, it’s always a good time.  You just have to identify the direction the market is going, and trade in that direction.”

 2. Understand the Price

“When you trade stocks, what you are actually trading is their price.  Price is very much a determining factor in whether you can make money from a stock or not.  You have to understand how to read it before you can work with it.”

3. Understand the Share

“If you observe people like Warren Buffett, you will realize that they always invest in companies where the value of the share is backed by what the company produces.  There has to be a correlation between what the share is worth and what it does.”

4. Buy High, Sell Higher

“Don’t look for bargains.  When the price of shares goes down, it usually keeps going down.  And if the price is low to start with, it’s low for a good reason!  Instead, buy when the price is going up.”

 5. Be Pro-Active About Trading

“If you are used to trading stocks, you will find that it is very easy to just hold a stock and do nothing with it, because you feel that as long as you have it, you aren’t taking a loss.  But when you do that, you are not generating any cash flow from it.  Take action instead.”