A list of Stock Market Trading Basics
I have always said that making money in the market is easy. It is learning how not to lose money that is the hard part of trading. To that end when you find yourself in the surprising and often disturbing position of having made a whole lot of profit, or more profit than you expected in a very short time and you are feeling overwhelmed. This is when you need to remember some basics.
Here is a list of Stock Market Trading Basics:
1. Stop trading for at least a few days to a week. This sounds ludicrous, but my experience with Students is that those who follow this rule keep their big gains, and those who do not lose them back to the market and then some. The reason behind this is emotion. You are in a state of emotional flux, and are not thinking logically. You are thinking I’m brilliant, I’m invincible, I am going to be rich! Well sure, but not at this moment. At this moment you are overly exuberant, irrational, and not trading wisely. So take a few days to cool off. The market is not going anywhere, and great trades will present themselves over and over again. There is no end to the trend of good picks, with a lull in the market and then good picks again. The primary factor in making money and keeping it depends upon the ability to stop trading and getting yourself under control again.
2. While you are recovering from the shock, and yes it is “shock and awe time” for most beginners as well as veterans when this happens, you need to do a couple of homework assignments. First go back to your training course, trading books, or educational resource to review and re-study the material again.
3. The next step is to write down your goals, set your established self-worth income and then try to increase it. Traders are their own worst enemy. You are not battling the market, or the Market Makers, or other traders. You are in battle against yourself. Every single person on this planet has a self-made invisible ceiling for the income level at which they feel comfortable. This subconsciously sets income “roadblocks” and keeps people from making more money, and it causes them to lose money in the Stock Market. The reason is “fear of success” which is too much success too fast creates panic and fear, because you are then utterly out of your comfort zone. If you really truly want to be successful in the market, you must have written goals. These goals must be very specific and detailed. You must define your comfort zone, and continually push the parameters upward to increase your ability to make more profits. Otherwise you will stagnate, and not increase profitability.
4. Most people refuse to do the goal writing because of “fear of failure.” They are so afraid that they are not capable of reaching those goals that they do not try. Try to write down realistic goals and adjust them as you see the need. Once you do the task of setting goals, you will find that well “Wow!” You do achieve your goals, or most of them.
5. Trading is 50% skill, with understanding your trading style and using proper strategies for the current market condition. The other 50% is controlling emotion which includes goal setting, keeping centered and calm, using discipline in your trading rules, having the determination that you will keep working until you are successful, maintaining your personal parameters while expanding them, and using logic rather than emotion. These are the major components of making money and keeping it.
View a variety training webinars to help learn the Stock Market Trading Basics and improve your trading in the Stock Market.
6. Most beginners do not allow themselves enough time to learn, explore, and discover their trading style and then learn to apply the trading strategies. They rush their paper trading and practice aspect, as they become impatient or greedy.
7. Most traders become complacent and do not set high enough goals, OR they lose their patience and rush to try every new gimmick that they hear about rather than sticking to a set of rules and parameters that they work to improve every day.
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Impatience is a trader’s worst enemy. At some point in time if you stick with it and work to improve, at some point you will be profitable and often beyond your expectations. When that happens, get this article out and read it again.
Martha Stokes CMT
Chartered Market Technician
Instructor & Developer of TechniTrader Stock & Option Courses
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