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Miscellaneous
Hints and Tips.
1. Low
price, high volume = Educated buying in progress.
2. Protect
your capital from losses {use stop losses}
3. Growing
your capital and finding the best returns are the two main goals of any trader.
Your trading capital is the “TOTAL” amount
that you have available for trading. Your main goal is to have this entire
amount exposed to the marketing various trades.
Restrict
your losses to a maximum of 2% i.e. if your portfolio is $ 100,000 {I wish]
then the total would only be $2,000, not enough to wipe you out. Remember as
you add your profits it will change your percentage.
4. Develop
a clear trading plan {written down] that sets the conditions for selection for
either buying or selling your shares.
5. Don’t
give up your daytime job, {unless you are already retired. Lucky you!}Until
your income from trading is matching or is higher than your wages.
6. Many
successful traders are using just the same methods that are available to you
i.e. charting, end of day data, company announcements etc. They also make
losses although some won’t admit it. It is how you minimise those losses that
count.
For losses
are guaranteed. Your trading “edge” comes not from the information that you
gather, but how you implement it and put it to use. Remember everyone has the
same information available as we do, {sometimes earlier.}
7. There is
lots of information available to you, this site for instance, check the free
download section where you will find new
information being added quite often.
8. Buy on
the rumour and sell on the news.
9. Work out
your entry price and exit price first before buying your stock.
10.
Momentum ties price movement together and helps to measure the acceleration of
price over several days.
11.
Overnight volatility is caused by the impact of news events. Volatility
describes how much we expect a stock to move on any given day.
12. When the share price shows that on all the
last 5 days, prices are higher than the last previous closing price. This means
a Bullish market. If the opposite is happening then you have a Bear market.
VOLUME.
Volume is
the “fuel” there are two usually two types of volume. These are High volume and
Low volume.
High volume
on a lower close in share price indicates selling pressure. Everybody wants to
get out, nobody wants to buy. So in able to sell the stock the share price goes
downwards. High volume
on a higher closing share price indicates buying pressure. Everybody wants to
buy, but nobody wants to sell. So traders have to bid a higher price to obtain the stocks they want. This forces the share price upwards.
RISK.
Every time
that you trade in the stock market you are exposing your self to risk.
The main
risk is the amount of money that you can lose if the stock you have chosen
suddenly decides to go downwards in price.
The one way
to minimise this risk is to have a stop loss in place.[see previous article
called “stop loss”]
How you handle this is by having an idea of
the amount you can afford to lose, You should have this already worked out beforehand and written down in your trading plan. This brings us to the
percentage you can use. The one that I use is the rate of 2% of the “TOTAL” of
my trading capital.
Your main
aim in trading is to have the entire amount i.e. $20,000 exposed to the market
in various trades.
Do not have
all your eggs in the one basket as the saying goes. So the most you can lose in
any one trade is $400.00 .This in effect saves you from being wiped out in one
fell swoop.
Remember as
you add profits to this will change the percentage. .Let’s hope you do this as
often as possible. I hope this has been of some help.
In the meantime Happy trading!
Strudy is a keen successful share trader on the Australian Stock Market.
Visit his weblogs for more free articles and useful information at both http://www.asxnewbie.com and http://www.aussiewealthreview.com
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