5 Undeniable Tips to Successful Stock Trading

By Phummie Helen

1. Knowledge is Power in this market
Knowing something is generally better than nothing, but it is crucial in the stock market that individual investors have a clear understanding of what they are doing with their money. It's those investors who really do their homework that succeed.
Don't fret, if you don't have the time to fully understand what to do with your money, then having an advisor is not a bad thing. The cost of investing in something that you do not fully understand far outweighs the cost of using an investment advisor.Never give in to the temptation of forgoing research and depend on heresy, coffee machine chat.. Always look for companies that pay dividends. Time and again research has proved that dividend paying companies weather the business cycle storms more effectively. Always research before you put in your hard-earned money in an investment. There are several resources that offer knowledge that can help you get the skill set to become a successful investor. Look for companies that are significant in its industry and that has demonstrated year over year growth in sales and profit.
2. Be Objective And Detached
Winning traders are objective and detached from the ongoing market action. They don't stare at their screens and allow their emotions to move up and down with how well their trades are doing. But novice traders often have difficulty remaining objective and unemotional. There's a very human tendency to avoid risk and loss.
In everyday life, our emotions protect us. When we anticipate harm, we become fearful. Fear is a powerful emotion. When we are afraid, we react quickly and instinctively. And when we act out of fear, it usually leads to impulsive decisions and trading errors. The more you can stay objective and detached, the easier it will be for you to control your emotions.
If humans didn't react to market events with strong emotions, there would be no volatility to take advantage of. Fear and greed are powerful emotions that sway the masses to buy and sell at the wrong time. The only difference between you and the masses, however, is that, as a successful short-term trader, you must control your emotions and not be influenced by fear and greed.
Master traders know how to control their emotions. They remain detached and objective. When the stock falls to the protective stop, the position is closed immediately. There is no sense of guilt, worry, or uneasiness. Small, controlled losses are expected, and there is no reason to be overly concerned about it. Similarly, when the stock price moves up to the profit target, the seasoned trader assesses the price movement and either closes all or part of the position, or even adds to it while raising the stop-loss. Either way, the seasoned trader has planned the trade and is trading the plan with controlled emotions and a calm, detached confidence that generally produces consistency and success.
It may be hard to stay unemotional and detached. The more experience you gain as a trader, however, the easier it will be. People are most afraid when they encounter novel and unforeseen situations, and when newbie traders first start out trading, their initial experiences are new and unpredictable. Under these conditions, it makes sense to put things in your favor.
3. Protect Your Capital
New traders want to know how much they can make. If they have X dollars in their account, how much stock can they buy and how soon can they get rich?
Veteran traders know better. They became veterans by surviving. They endured the occasional painful losses, yes, but even more so, they were able to withstand the times when trading just has very little to offer. Veterans are willing to wait out the slow trading times without putting it all on the line to make a quick buck or add some excitement. A veteran trader will tell you that goal number 1 in trading isn't about how much you can make. Goal number 1 is all about protecting your capital and staying in the game.
4. Don't put all eggs in a basket
Diversify your trading capital into different sectors of the economy in order to build a strong portfolio.
5. Never Buy a stock because the price is rising, in the same vein, Never Sell a stock because the price is falling.
Always seek to know the reason for price behavioural pattern, either through personal research or consult a stock analyst.
Finally, success in the stock market takes some hard-work and effort. Take Money/Risk management into consideration and you will never have to sell your shirt.
To your Trading Success, Phummie Helen
Phummie Helen is an Internet Entrepreneur and a stock investor who derives pleasure in revealing various ways people can be successful in the stock market and also enjoy the beauty of internet businesses.
She is currently running a blog on Stocks Business Revelations. Check out her blog on http://www.coolstockbiz.blogspot.com
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