The amount of profit one makes is not the most important factor in trading. Many trader are more concerned with how they protect what they have rather than the dollars of profit they make.
For the average trader, not all trades are profitable, but with a sound money management program you can accumulate great wealth
Yes stop orders are very effective depending on the securities you are trading and the markets you are trading in.
Traders NEVER get involved with "hugh" losses, once again this is because they have a sound money management and trading program in place
To be a trader you must first learn how to invest. You must know the products and the markets in which they trade, how security transactions are cleared and more importantly you must know the rules that govern those products and markets. So you must know what you’re doing, why you’re doing it, and how to do it. You should start by reading “Investing for Dummies” by Eric Tyson.
Here’s a list of books you should consider, at least read half of them
Bulls Make Money, Bears Make Money, Pigs Get Slaughtered, by Gallea
How to Trade in Stocks, Jesse Livermore
Millionaire Traders, Lein & Schlosberg
One Up on Wall Street by Peter Lynch
Reminiscences of a Stock Operator, Edwin Lefevre
The Disciplined Trader, Mark Douglas
Trader Vic-Methods of a Wall Street Master, Victor Sperandeo
Trader Vic II-Principles of Professional Speculation, Victor Sperandeo
Trading for a Living, by Alexander Elder
Trading in the Zone, Mark Douglas
And when you think you want to trade, try some paper trading to test your skills without spending you money http://simulatorinvestopedia.com/ http://www.moneyworks4me.com/
and/or http://www.tradingsimulation.com/
Before you enter your first order you need to address four major policies and have very strong discipline to follow them
1 - You need a written sound trading/investment plan with rules that will not only help you but more importantly protect you, mostly from yourself. Always use stops either to protect you on the down side or to lock in profits on the up side. Never trade on emotions, when emotions get involved walk away. Don’t try to out-smart the market, you’ll loose but if you always take what the market is willing to give you, you’ll be successful. Other words, you don’t trade against the trend since the market is always right. And NEVER trade on emotions, once you let emotions in your trades you will loose
2 - A written money management program is essential. Remember never invest 100% of your capital into any one security and never have 100% of your capital invested. Never go into a trade without knowing when and where you are going to get out of it. Never let a loss on a trade get greater than 8%-10%, always take you loss and walk away - don't loose more than you need to and don't be afraid to take the loss. Remember you never can get hurt taking a profit. Never average down, but you can average up.
3 - You must have sufficient trading/investment capital. Use your own money, there’s no need to go into debt so that you can trade and/or invest. Margin can be used but only with restraints, never let the account wall below 45% equity. Unless you fully understand margins you should not use it.
4 – A full and complete understanding of the rules & regulations of the industry. If your going to play in the game be sure you know the rules of the game and always follow them.
Unless you are willing to study and follow the above you will never make it as a trader. To be successful as a trader it takes work and constant study of the markets and the products traded in those markets, there is no easy way.
Hi there,
You should try with Penny Stocks Trading (you can find more info here: http://pennystocks.toptips.org)
Penny stocks, also known as cent stocks in some countries, are common shares of small public companies that trade at low prices per share.
I've been subscribing to this PennyStock web site for about a year now and have loved the objective advice they give. He really does look for quality stocks and I've made some pretty nice profits on a lot of his suggestions. Being still fairly new to investing I have been dabbling a lot in penny stocks to try and grow my account. I may not have a big account, but it's a lot bigger than it was a year ago. On just one of Nathan's picks this year I managed to make my investment back ten-fold! Be careful! Penny stocks are notoriously risky but if you follow the right method the risk is almost 0. I suggest to invest only little money first and then reinvest the profits. This is the site I'm using: http://pennystocks.toptips.org
Good Bye
Investing requires a number of things including a tool kit and a skill set, but without some intangibles such as instinct and intuition success will be limited. The novice needs many tools that the skilled investor won't use because of their limitations. Stop losses can be like that, similar to the training wheels on your first bicycle that keep you from falling but at the same time kept you from learning more. If you lack the skill to do without them, they are a necessary evil.
No one can pick a bottom or top with certainty. Let's say a stock is at 20 and you buy it, expecting it to jump to 30. Instead, it drops to 18, and your stop loss sells you out to limit your loss.
If it was a good buy at 20, is it not a better buy at 18? This is what happens when you think you have picked a bottom in advance of an uptrend. If your basic analysis of the stock making a dramatic turn upward is accurate but your assumed numbers are off, a dip before the charge is no problem and you still win. If it falls first, it may call for a re-assessment of the position which can result in your buying more or selling out but that will be a considered action, not a blind reaction. To do that you must monitor your investments and have the skill to read conditions and understand changes. Good investors do that, and have very little use for stop losses because they have done their homework well and have confidence in it.
There are no tools that compensate for the lack of skill and experience. A paint brush is just a paint brush- what it produces depends on the talent of the person using it.
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First, let's state that I'm probably qualified to answer your questions. I'm a self-taught, independent investor with about 15 years practice, forced to learn how when I realized that paying brokers to lose money for you was stupid. Monday was a very good day, I made $28K. A couple weeks ago, $6250 in 30 minutes on an options trade. Today, I'm losing around $3K. A year ago, I bought $300K in a single stock of a company perceived as flaky, and even my nephew thought I was crazy. It did not do as well as I expected, but in four months it still made 80K. My nephew jumped in late and made $24K. Yes, you can make money.
However, it's the long run performance that separates the winners from the losers, not the single play. My total portfolio performance is 880% gain over the last 5 years, and I don't know of anyone with a broker who ever gets results like that.
The fact is that there are a multitude of approaches to investing, and most people think that if you don't see it their way, you must be ignorant or foolish. Fact is that what works for one does not work for another, because there is far more than money and a fixed set of rules involved. Your mental wiring is a huge factor, and many people just can't handle what others find easy, or see no opportunity where another investor sees a huge one.
So- you have to invest WITHIN your personal limitations, and you can be successful with a variety of strategies, so long as you are skilled at them. This is why some do very well and others barely beat inflation. I have an extremely intelligent brother who is of the latter kind, but he knows it. So his son and I, both self-made millionaires in investing, manage his stocks for him. The trick in this case is that he recognizes that particular limitation and simply gives that duty to others who are more capable in that area, while he does what he knows how to do well. He is also a self-made millionaire from business operations.
You avoid huge losses by not making stupid mistakes- and you make big gains by taking carefully calculated risks with the odds well in your favor. The trick is knowing how to recognize those things, and having the brass to move boldly when the time is right.
The right rules for you are the ones that work for you- not someone else. You learn from others where possible, so you don't make their mistakes. You learn more from yourself, so you don't repeat those mistakes you weren't wise enough to avoid in the first place. That's how you get good.
The only way to come to know what is right for you is to try. Start by educating yourself so you know all the basics and how the mechanics of it works. Read some of the top books, particularly one called "The Intelligent Investor" by Benjamin Graham- and take special note of his reference to "Mr. Market", which every investor needs to understand. When you start putting money down, be conservative so that the "tuition" you will pay to learn doesn't get out of hand.
I'm making good profit with a binary option signal software called "autobinary signal". It's great!! Check here for more information ( http://forexsignal.kyma.info )
I recently became interested in stock trading and I may want to get into that after I graduate. I have a question for people with experience as stock traders, especially independent stock traders. How successful is it? How much profit do you make? Are stop losses and stop limits effective methods to avoid huge losses? I just want the best advise out there.
