Stock Market Trading Tip
So if you’re trading stocks and shares, what would be a great stock market trading tip?
If you’re trading stocks and shares, it will depend on whether you are day trading or doing longer term trading.
To make money from the stock market, you will need to use some of the secrets of successful traders.
Here are the top 3 tips to know when it comes to how to make successful trades:
1. If you’re day trading, you will have to take advantage of a stock that moves in hours or even less. And this usually happens with stocks that are liquid and which flow well. Some stocks move up and down in nice wave forms and will be able to move and create profits. Some stocks are erratic and move up and down in a congestion pattern. When this occurs, you can enter and then get stopped out with a large wicky candle and not able to ride the wave. Ideally with a smallish commission and big move, a profit can be made from a decent move in the stock.
2. For longer term trades over days and weeks, you can trade technically or fundamentally. Some fundamental trades can make profits, but these take time usually, unless it is just before a major change in the stock price and you happen to get in just before this. Some companies offer stock tips and recommendations, but look at their track record. Are they brokers who encourage you to buy stocks becuase they have some sort of other vested interest or that they get personal bonuses and thus is not sound, or are they specialists in stock trading to make profits overtheir trades. Alternatively, if trading with fundamental analysis, then its a matter of letting profits run and having stop losses in and not risking too much per trade. Trading a penny stock can sometimes work but you need to try a few before you realise a profit on one.
3. Money management.
In whatever style of trading you’re doing, you can never be 100% on a win loss ratio - the idea instead is to be in the game to make the big winners and to have some small losing trades along the way but to be ahead overall. Even if you’re taking stock trading tips from a company you still want to not risk too much per trade as you may need to be in a number of trades to catch the winner. Depending on the number of trades you want to take per month, you may need to dedicate a certain percentage of your cash float to make the trading sensible and profitable.
With leverage, such as CFD trading and forex trading you can take positions larger than your cash float as compared to stock trading. The use of leverage means that your trading results are magnified. Stock picks from a reliable source who have proved themselves over a long period may be quite helpful but ones that are from unproven sources can be risky and is like random entry in some cases.
Some people go the other way and join up mutual funds, but again the results of these in the stock market depends on their skill and whether they are ordinary stock pics that track or even is worse than the index rise or whether they are picked by skilled fundamental investors and traders in the medium term time frame who know what they’re doing.
So consider these stock tips when it comes to your overall trading strategy.
. 10 Feb 10 | stock trading