When traders spend too much time analyzing security, especially a technical one, they often forget why they are doing this analysis. After all, the main goal of any participant in exchange trading is to make money by selling high and buying cheap. It is in such moments especially worth remembering that all brilliant – easy, and it is not necessary to puzzle over the analysis, and cost takes a fresh look at the market (at least try), and take a look at Broker.cex.io and observe the following 18 rules of effective trading on the exchange.
And when the trader in his head dozens of technical indicators and figures, it is likely that some of them portend falling, others – the growth, the third – the absence of changes, etc.
A trader can be led astray by such disagreements. (Do not think that I have anything against technical indicators; For someone they – saving)
Rules for Effective Trading on the Exchange
- The first and foremost rule: you need to stay in an upward market for a long time. It may sound like a matter of course, but often traders exit on the first slight downturn after the first high, arguing that the market rallied too quickly and the stock is overvalued. As a result, it turns out that by exiting early, the trader loses profit, which would have increased by itself due to his patience and long-term investments in the growing ( bull ) market.
- Buy securities that show potential and sell those that show no potential. Interestingly, the crowd continues to buy even if prices fall. And professionals buy when prices are just starting to rise. The connection here is such that, under pressure from the crowd, the stock showed potential and the price of the financial instrument went up, and the professional bought, waiting for the growth, as soon as the hidden forces appeared. It is important to note that the crowd did not buy because the professional did: the crowd bought because “newbies are lucky”. The rule of survival on the stock exchange is not to buy low and sell high, but to buy high and sell high. And when you choose from a group of companies, sell “withering weaklings” and buy promising companies.
- Treat each trade as the most important deal of the year. Be sure to make sure that you have weighed the risks and rewards, thought it over, calculated the trading algorithm for all outcomes, and calculated the impact of the transaction on your portfolio.
- On an uptrend, buy near support, and on a downtrend, sell near resistance. Wait for 33-50% of the previous correction is enough to confirm the current one; you can also resort to moving averages for greater reliability.
- Be patient: if you missed a good moment, wait for the next correction.
- Be patient: After completing a trade, give it time to mature and bring you a profit.
- Be patient: do not think, like in gambling, that “ you need to get out of the game on time ”! The stock market is not a gamble and this rule does not apply here at all. If you are already in positive territory, this does not mean that you have to take profit and leave. After all, a small profit can never become large if you do not let it grow. Big profits come when you are patient and allow a few trades to enrich you. It is important to develop the patience to stay in good deals.
- Be patient: after completing the transaction, give the financial instrument time to stand out from the crowd, stabilize and show everyone your correct decision.
- Be Impatient: The best losses are small, short-term losses. The loss of money is not as important as the loss of the moral and mental peace that will torment you while holding the falling security. Get rid of her.
- Do not, under any circumstances, buy stocks that are falling in price. If you want to buy, then each subsequent purchase must be made at a higher price. If you are selling, then each subsequent sale must be at a lower price. And never deviate from this rule.
- Multiply what works for you. Those. check your portfolio and buy what brings you the highest profit and sell what brings you the least (or negative) profit.
- Don’t trade until the fundamental and technical analysis is in full agreement.
- If you have serious losses, stop trading and pause for a few days. After big losses, in a fit, you want to return what you lost, which, as a rule, does not lead to anything good, because transactions are not done deliberately. Relax; cool down, and come back with a clean and rational mind.
- If you have a serious profit, trade more aggressively to exaggerate this profit.
- When you increase the number of instruments in the portfolio, then buy no more than 50% of the current amount of the financial instrument. For example, if you have 100 shares of a certain company, do not increase the number of shares by more than 50.
- Think like a guerrilla: fight on the winning side. Don’t waste time and effort in meaningless attempts to become an upstart, to earn status or rating by buying low and selling high. Just think that your task is to make a profit and fight on the side of the stronger. If neither side gains the upper hand, then you shouldn’t fight at all.
- Market highs are generated by pressure and violence; market lows occur during quiet, calm times.
- The last 10% of the growth time of security accounts for at least 50% of that same growth. Those. the fastest growth occurs at the end. Consequently, the first half of the price increase occurs 90% of the time, during which it will be very difficult to trade and refrain from wrong actions.
- As you can see, these 18 rules for effective trading on the exchange are quite simple. They follow common sense, but experience shows that it is difficult to adhere to them.
Remember that trading securities require common sense. Don’t waste your time on complex technical indicators (this is the lot of avid techies, not private investors). And remember that you should only trade with the main trend and the majority.