Three Basic Rules for Stock Trading Success
Released on = May 15, 2007, 11:48 am
Press Release Author = Rockwell Trading, Inc.
Industry = Financial
Press Release Summary = Many people tend to believe that stock trading is difficult, time-consuming and risky. Following three basic rules for stock trading success can greatly simplify trading and increase your chances of making money in the markets.
Press Release Body = The first rule dictates to only buy a stock that is moving up and do not hold a stock while it is moving sideways or going down. The rationale behind this rule is that it is much easier to take advantage of the momentum of a stock in a uptrend than trying to pick bottoms or tops.
\"Many traders tried to pick bottoms and failed. The most successful traders are waiting for a confirmed uptrend before buying a stock. You just have to make sure that you identify the trend early and don\'t wait too long, since in the past couple of years uptrends were short-lived\", explains Markus Heitkoetter, CEO of Rockwell Trading, Inc.
The second rule states that a trader should always know when to exit. This rules applies to both possible outcomes of a trade: A trader should determine a so-called \"stop loss\", which is either expressed in a percentage of the price or a fixed dollar amount. If the stock moves down, the trader sells the stock at the predefined stop loss point and, therefore, limits his losses to the predefined dollar amount. Most traders like to apply a stop loss of 2% - 10% of the capital invested in a stock. The same applies for a so-called profit target: Successful traders know when to exit a trade with a profit, since there is no guarantee that the stock price will rise forever. A typical profit target is 5% - 15%.
The third rule is about picking the right stock and is tight into the first and second rule. A trader should always be looking for stocks that just started an uptrend and are likely to maintain the momentum. If the expected uptrend does not happen, the trader liquidates his position and moves to the next stock.
Private traders can adjust their portfolios faster than money managers, since private portfolios are usually smaller. Therefore, the private trader definitely has an advantage and has the potential to outperform the performance of traditional mutual funds, if he applies the right trading strategies.
Web Site = http://www.rockwelltrading.com
Contact Details = Markus Heitkoetter Rockwell Trading, Inc. 141 W Jackson Blvd Suite 1910 Chicago, IL 60604 info@rockwelltrading.com 866-467-0747
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