#1 Rule of the Market: Follow The Rules
- #1 Learn the market first – Before you even think about sticking money into the market you need to become experienced in paper trading. (Trading on paper with fake money.) You need to become familiar with all the market terms and rules. Learn about support and resistance. Learn about the PDT rule and unsettled funds. Create a watch list of stocks and practice, practice, practice. Here is a list to get started >> Market Terms. Read forums, get ideas, watch Youtube videos. Learn how to perform stock analysis here.
- Note: It could take months or years to become educated in the market.
- #2 Cut losses quickly – This may be a simple concept, but you can easily get caught up in a falling stock and before you know it you are down a lot of money. If the stock is going the wrong way, get out. Do NOT double down. There are plenty of other stocks out there.
- #3 Self Discipline – Do NOT trade on emotion. Have an entry plan to get into a stock and an exit plan to get out. Stick to your plan. Once the stock hits your target price, close the trade. Always learn from your mistakes. It is ok to make a mistake if you learn the lesson from it. Learn to manage risk.
- #4 Choose the right broker – Do some research and find a broker that fits your needs. Read more here.
- #5 Develop a strategy that works for you. Patterns repeat themselves in the market. Once you find a working strategy to trade a pattern, use it to work for you or develop your own strategy. Master a pattern.
- #6 Use volatility to you advantage – Volatile stocks can easily rise over 20% on simple press release if there is volume.
- #7 Have an entry and exit strategy, learn support and resistance.
- #8 Until you are scarred with loss, you can’t understand the risks you take, what doesn’t kill you, makes you stronger.
- #9 Never change a stop loss, or chase a stock, use limit orders.
- #10 Avoid Unsettled funds and understand the PDT rule (3 day trades in 5 days)