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The Moneymunch editorial staff is a team of experienced financial writers and analysts with over a decade of experience in the financial markets. They have previously contributed to popular financial blogs and newspapers, and are passionate about providing accurate and up-to-date information to help both investors and traders make informed decisions. Trust the Moneymunch editorial staff to provide reliable and effective financial advice that can help you achieve your financial goals.

10 Habits for Traders

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1.  Follow the Rule of Three.  The rule of three simply states that a trade will not be made unless you can carefully articulate three reasons for doing so.  This eliminates trading from an indicator alone.

2.  Keep Losses Small.  It is vitally important to keep losses small as most all of large losses began as small ones, and large losses can put an end to your trading career.

3.  Adjust Stops.  When a trade is working move your stop loss up in order to lock in gains.

4.  Keep Commissions Low.  There is a cost to trading but there is no reason to overpay brokerage fees.  A discount brokerage is just as good as a premium brand name one.

5.  Amateurs at the Open, Pros at the Close.  The best time to enter trades are after lunch when the professionals are looking to get in at a better price than one provided in the morning.

6.  Know the General Market Trend.  When trading individual stocks make sure you trade with the general market trend or condition, not against it. 

7.  Write Down Every Trade.  Doing this will allow you to learn what is working and what is not.  It will also help you determine what types of trades work best for your personality.

8.  Never Average Down a Losing Position.  It is a loser’s game when you add to a loser.  You add to winning positions because they are winners and are proving themselves to be such.

9.  Never Overtrade.  Overtrading is a direct result of not following a well thought out plan, deciding it is best to trade off emotion instead.  This will do nothing but cause frustration and a loss of money.

10.  Give 10 Percent Away.  Money works the fastest when it is divided.  When we share we prime the economic pump of the universe.

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Disclaimer: The information provided on this website, including but not limited to stock, commodity, and forex trading tips, technical analysis, and research reports, is solely for educational and informational purposes. It should not be considered as financial advice or a recommendation to engage in any trading activity. Trading in stocks, commodities, and forex involves substantial risks, and you should carefully consider your financial situation and consult with a professional advisor before making any trading decisions. Moneymunch.com and its authors do not guarantee the accuracy, completeness, or reliability of the information provided, and shall not be held responsible for any losses or damages incurred as a result of using or relying on such information. Trading in the financial markets is subject to market risks, and past performance is not indicative of future results. By accessing and using this website, you acknowledge and agree to the terms of this disclaimer.

Emotions as Information

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Start with a premise: Suppose you were empathic and could experience the emotions of the trading crowd.

You could feel their fear.

You could sense their greed.

What they felt, you felt.

If that premise were true, then emotion would not be something you would fight, ignore, or minimize.

Nor would emotion be something you’d blindly follow.

For the empath, emotion would be information: valuable information. It would be an indicator no less than market price or volume.

How would it change your trading to view every trading emotion as information to be scrutinized? How would it change your experience of your trading?

Discipline will help you in Stock Trading?

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“Discipline in executing each and every trade according to your trading methodology is the secret to your success. If you want to improve your trading, what you need to do is very simple. Before you enter any trade, imagine that you will have to explain this trade to a panel of your peers, by explaining to them the reason for your entry, your money, trade, and risk management guidelines, and why you exited the trade. Imagine having to explain why you chose this particular market and this particular time frame, along with how you set objectives for the trade, and how you determined where your initial protection would be. If you can truly do this, I strongly believe that you can be successful.

Just prior to entering every trade, try to imagine yourself executing the trade perfectly. Imagine how it will feel when you enjoy having made money with your trading.

Yes I know, you don’t have time to do that. Why? Because you never plan your trades ahead of time. You probably don’t have a strategy, and instead of waiting patiently for trade that meets your well-defined parameters and your thought-out plan, you just jump in the minute you think you see something that looks good.

You need to take a lesson from a spider. The spider waits patiently in his web until some unsuspecting insect flies into the spider’s trap.

Have you been flying into any of my traps? I wait for trades that meet my expectations, trades that fit my plan. I wait patiently, and being kind-hearted I don’t want any of my readers to land in my web. I’d rather the unsuspecting are readers of someone else’s newsletter. But it’s amazing how often I get to feed.”

TRY TO KNOW SOMETHING ABOUT MARKET…

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market is always rightRemember that the stock market is always right and price is the only reality in trading. In case if you want to make money in any market, you need to mirror what the market is doing. On the other hand if the market is going down and you are long, the market is right and you are wrong. Moreover if the stock market is going up and you are short, the market is right and you are wrong. Other things being equal in stature, the longer you stay right with the stock market, the more money you will make. On the other side of the coin the longer you stay wrong with the stock market, the more money you will lose.     up-down In general every market or stock that goes up will go down and most markets or stocks that have gone down, will go up. The general thumb rule in this regard is the more extreme the move up or down, the more extreme the movement in the opposite direction once the trend changes. This is also termed as “the trend always changes rule.“           looking for resone In case if you are looking for “reasons” that stocks or markets make large directional moves, you will probably never know for certain. Since we are pretty much dealing with perception of markets-not necessarily reality, you are wasting your time looking for the many reasons markets move. A huge blunder most investors make is assuming that stock markets are rational or that they are capable of ascertaining why markets do anything. To make a profit trading, it is only mandatory to know that markets are moving – not why they are moving. In an ideal scenario stock market winners only care about direction and duration, while market losers are obsessed with the whys.     newsStock markets normally move in advance of news or supportive fundamentals – sometimes months in advance. In case if you wait to invest until it is totally clear to you why a stock or a market is moving, you have to assume that others have done the same thing and you may be too late. You required to get positioned before the largest directional trend move takes place. Theoretically speaking the market reaction to good or bad news in a bull market will be positive more often than not. On the other hand the market reaction to good or bad news in a bear market will be negative more often than not.  

You will never earn Money in Stock Market if you

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You are entering a position out of EMOTIONS or ANTICIPATION at wrong price level in a WRONG scrip with GREED or HOPE with no pre-entry exit in the place – even worst, once in a trade, riding the position with HOPE without STOP LOSS even if it goes against the entry – adding more to average down in the entirely wrong trade – at last running out PATIENCE and out of FRUSTRATION booking huge LOSS. Even the position is in PROFIT there is no STOP LOSS or pre-entry EXIT in place – exiting the position abruptly in FEAR booking just a small profit with FEAR that market may take this small profit too – these random small profits unable to compensate earlier big losses! To cover big losses you try more and more RANDOM trades and above process continues – end result it challenges your EGO and creates more FEAR, more AGONY – cycle continues with small profits and big losses – until account is wiped off.

Learn by doing

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learn

What we have to learn to do, we learn by doing.