13 Things You Should Never Do When Trading Stocks

By David Colletti


Never say never except in the following cases:
1. Never break your trading rules -
What ever rules you have, stick to them. Strict discipline is essential to preserving capital and to your overall success.
2. Never underestimate the importance of discipline -
Learning the basics of stock trading is the easy part. However, most traders fail in the stock market due to their lack of discipline, not their lack of knowledge.
3. Never trade without a plan -
Always remember the reasons you took the trade in the first place. Don't get shaken out by intra-day whipsaws or volatility if the stock chart still looks solid and price is above major support.
4. Never seek the Holy Grail -
There is no Holy Grail of trading. No matter how long you look, you won't find it. There is no secret formula to success in the stock market. The closest thing to the "Holy Grail" is disciplined risk management.
5. Never believe in a company -
The only thing that matters is revenue growth. Forget the press releases; they are designed to boost the stock price. Trust only the numbers and nothing else.
6. Never Trust the talking heads-
Ignore the so called 'Guru's' on TV and other media outlets. They have their own agenda and they certainly do not have your best interests in mind. Do your homework regardless of the information source. It's your money at stake, not theirs.
7. Never trust the market; it is not your friend-
The market doesn't owe you anything for all the hard work and study you have done to learn how it works. It only pays off when you just happen to be right, and your timing is perfect, whether it was luck or skill it makes no difference to the market.
8. Never trade to get even -
Every new trade is its own and must stand on its merit. Never trade with revenge in mind. Trading should never be a game of catch-up. If you have a loss, take it with the same composure you entered the trade with and take the next trade with discipline and emotional control.
9. Never ignore intuition -
Your intuition knows best most of the time, respect it. That's the voice of reason, the voice of a disciplined trader trying to get through your thick skull.
10. Never count your profits while in a trade -
Never count your profits before you close the trade. The market gives and it can take away just as fast.
11. Never hate to lose -
You must expect to win and lose. Nobody is perfect. Nobody wins every trade. Expecting to lose is a defensive disciplined style. If you are willing to cut your losses quickly then losing trades will be common. But they will be so small that it will not affect your bottom line because when you win, the winners should be much bigger if you let the winners run.
12. Never expect perfection-
If you see a service advertising "every trade is a winner" or "We haven't lost a trade in 6 months" These are gimmicks. A trade is not a winner or loser until it's closed. They may have 10 winning trades in a row that they've closed but they also may still have open losers that they have been underwater in for the past 6 months. Expect to win and lose with regularity. Expect the losing trades to teach you more about winning, than the winning trades will.
13. Never think of trading as entertainment -
Trading is a job or a business. You are in it to make a profit. Most of the time it should be like any other job; boring. The markets are rarely exciting, even when you are making money.
Copyright © 2008 StockTradersHQ.com
David CollettiFounderStockTradersHQ.comThe Headquarters for serious traders.
Copyright © 2008 StockTradersHQ.com
This article is courtesy of David Colletti, a ten year veteran stock trader and founder of StockTradershq.com. Our staff of professional technical traders analyze 1,000's of potential stocks every day to provide you with a list of stock recommendations nightly with the greatest potential for explosive gains. These stock picks are traded with our real-time portfolio. Email alerts are sent to members for every entry and exit. Our subscription service provides all the resources, stock picks and tools an investor needs to make very profitable, consistent trades while maximizing gains and minimizing losses. StockTradersHQ.com offers a 21 day free trial with full member access.
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