With all the risk encountered on the stock market, it helps to have a set of guidelines to follow for making your overall trading decisions. While each expert has their own ideas of which rules are the most important to follow, here are some that usually come up among the top 10 trading rules.
Have a strategy and stick to it
Before you get started trading, do some critical research on a variety of different trading strategies and choose the one that best fits your financial goals and personal style. Then stick with that strategy. All of them can bring in profits, but not if you keep jumping from one to another.
Follow the trend
Don't try to buck the trend. For many traders this is easier said than done. Most people involved in stock trading are more independent minded than average and have a natural tendency to avoid doing what everyone else is doing. For the sake of your profits, try to rein that tendency in a little.
Know when to cut your losses
This is another often heard piece of trading advice that's hot so easy to follow. None of us like to admit we've made a mistake and simple hope keeps many traders holding onto a falling stock waiting for things to turn around. Before you enter a trade, decide your stop loss price so you'll know exactly when to sell.
Don't overtrade
Try to stick to 3 to 5 positions you know well and are satisfied with. Any more and you're likely to start losing control and making unsound decisions.
Manage your risk
Before you even start trading for the day, choose your objectives, entry points, and exit points to avoid any rash decisions. Never risk more than 5% of your account on one trade. Also make sure you always have stop-loss and take-profit orders in place.
Do your research
Before you buy stock in a company learn as much as you can about it and where it's headed. That means more than just looking up its stock symbol. Dig into information on how the company is run, their objectives, and what their customers think about them.
Be flexible
While sticking to a strategy is important, the stock market is highly dynamic place and it's bound to surprise you with sudden shifts from time to time. Accept this and be ready to change your decisions when needed.
Beware of your emotions
If you're tired, grumpy, or even overly optimistic, take the day off. Same goes if you're not feeling well. A mistake caused by emotions or plain tiredness could cost you thousands, which won't do anything for your mood or your health.
Question everything
Even the writers and editors at the top trading magazines and newsletters make mistakes. They may have a lot more time to analyze stocks than you, but no analysis system is perfect, especially when used by imperfect human beings. It's fine and, in fact, usually profitable to take cues from the experts, but you owe it to yourself to verify any information and tips you get before you invest.
Unfortunately, there's no one set of rules that will guarantee success on the stock market, but by using the top 10 trading rules set out here as guidelines, you're bound to improve your results.
Latest Finance Articles
Understanding Debt Consolidation Loans
By: Richard Greenwood | 07/10/2008
It can be all too easy to end up in debt and especially during the current times of financial uncertainty you may find yourself unable to make repayments. Consolidating your debt can make your debts easier to manage and lower your interest charges meaning you become debt free faster.
Credit Card Comparison
By: Richard Greenwood | 07/10/2008
Credit card offers are everywhere and all claim to out do each other. How do you cut through the marketing talk and understand the key features you need to compare to make an informed decision. Find out with this informative article on credit card comparison.
Shopping For Auto Insurance
By: Brenda Williams | 07/10/2008
When you get your license for the first time before you begin driving you need to get car insurance as it's mandatory to have car insurance while driving. Car insurance can be rather expensive, especially for new drivers which is why you'll need to ensure that you're getting the best...
Taking 100% Responsibility - the Prerequisite for Creating Money & Marriage Success
By: Leslie Cunningham | 07/10/2008
It's a simple concept, to refrain from blaming and complaining, and yet it's a challenge to change a habit, especially one that everyone else has. Like sticking to your diet, when everyone else around you is enjoying chocolate cake. Keep reading and you'll find out how this relates to your marriage and finances. Then I'll share some action steps to help you become 100% responsible for your life.
Retirement Income Investing and Your Portfolio
By: Steve Selengut | 07/10/2008
Brokerage firm monthly statements are designed to promote either fear or greed, depending on the current market environment. Nowhere on your statement can you find numbers that report your net investment, your total working capital, or your true asset allocation. Current and projected income numbers are given little attention
Buy to Let Investors Get a Boost
By: Parmdeep Vadesha | 06/10/2008
Buy to let UK investors are in a prime position to take advantage of a new government plan to spur property market activity. The scheme aims to permit property buyers to buy properties worth up to
How to Buy a Repossessed Property for Below Market Value
By: Parmdeep Vadesha | 06/10/2008
Buying a repossessed property is what matters for investors who are keen on reaping high profits. But even with the advantages it poses, there are certain aspects you need to be aware of before you start on the task of acquiring your next property cheaply.
Brits Should Ensure They Have the Cheapest Energy Supplier
By: Abbi Rouse | 06/10/2008
With energy prices escalating steadily, consumers could knock considerable amounts off their utility bills by switching from their areas default supplier.
More from Mark Crisp
The Secret to Stock Market Investing and How to Be Successful
By: Mark Crisp | 21/08/2008 | Finance
To novices and the inexperienced, investing in the stock market can seem extremely intimidating. That is completely understandable. Trying to invest your money without knowing much about the market is akin to walking into a casino and dropping five hundred dollars on a single poker hand when you have never...
How to Become a Professional Day Trader
By: Mark Crisp | 21/08/2008 | Finance
Day trading occurs when you buy and sell a stock within the same day. The reason you would buy and sell in the same day is to turn a profit with a short-term movement in the stock price. If you hang on too long, the up tick will have passed...
Could Penny Stocks be Your Ticket to Stock Market Success?
By: Mark Crisp | 21/08/2008 | Finance
A penny stock is a stock that is not traded on a major exchange such as the NYSE, NSADAQ or AMEX. It is usually traded over the Pink Sheets or OTC bulletin boards. The stocks generally sell for less than $5 per share of stock, although some will argue that...
Is Momentum Trading For You?
By: Mark Crisp | 20/08/2008 | Finance
Momentum traders seem to get involved in this type of stock transactions because they love the rush they receive in trading volatile stocks.
Of course, that may be just the reason why you shouldn't get involved. Momentum traders find stocks that are on an upward or a downward swing when they...
10 Tips For Successful Stock Market Trading
By: Mark Crisp | 20/08/2008 | Finance
1. Bargain shop - When stock prices drop it is time to hunt around for some bargains. Remember that you want to buy low and sell high. When the stocks are low it is the prefect time to buy. Don't fall into the trap of selling off your stock the...
How to Get Involved in Momentum Trading
By: Mark Crisp | 20/08/2008 | Finance
Momentum trading can be very exciting because of the highs and the lows. The idea behind this type of investing is to find stocks that are anticipated to be either going very high or going very low on a given day. The momentum trader jumps on and rides the momentum...
Should You Invest in Futures Trading?
By: Mark Crisp | 20/08/2008 | Finance
Futures trading is a different type of trading in comparison to trading stocks and bonds. When you purchase stocks and bonds you have physically bought something that you own, but that is not the case with futures. In futures trading you are speculating about whether the price of a commodity...
Should You Invest in Emerging Markets?
By: Mark Crisp | 20/08/2008 | Finance
Emerging markets is a lucrative field of trading. An emerging market occurs in third world countries whose economies and developments are on the rise. Developing countries can experience intensely quick economic growth, which makes them quite attractive to investors. Economic development comes in the form of putting infrastructure such as...
Finance 
