Trading Tips: Six Essential Rules For Success!

| July 30, 2015 | 0 Comments

checklistTrading Tips From A Pro…

Let me tell you something that others in the financial newsletter business won’t…

Despite the assertion of quick and easy profits made by many in this industry, trading isn’t easy at all.  In fact, the endeavor can be downright challenging if you don’t have the right method and attitude.

Whether you’re just getting started in this game, or you’ve been trading for years, you’ve probably noticed you’re prone to a few bad habits.

Maybe you’ve…

  • Held on to a losing position, hoping for it to make a recovery.
  • Sold a winning position for a small profit, only to watch the stock or commodity skyrocket without you.
  • Traded too much. Jumping around from trade to trade in hopes of finding the next big winner, only to find you’ve churned your portfolio for zero profits.
  • Tried calling tops and bottoms in the market.
  • Become emotional (mad) when a stock doesn’t do what you expect it to.
  • Defended a losing position, refusing to accept you’re wrong.
  • Closed a trade for an exceptionally big loss.
  • Bought more of a losing trade (averaging down).

What you see above are just a few of the bad traits that every trader tries or experiences at some point in their career.

Let me be clear…

If you keep repeating the mistakes above, you’re trading/investing experience is going to be painful and short.

To effectively distinguish these bad habits, you need to look at trading from a fresh perspective.  I’ve put together a short list of beneficial habits that profitable professional traders adhere to each and every day.

Let’s get to it…

Six Trading Tips For Immediate Market Success

Let’s get the basics out of the way first…

Like everything in life, having a good attitude is essential to success in trading. 

You’re not going to take consistent profits out of the market if you’re convinced you’ll lose from the get go.

With that said, overconfidence is just as dangerous in trading as a lack of it.  It may take a while, but finding a balanced attitude is essential to market success.

What do I mean by “balanced”?

To collect consistent profits, you must be confident in your process, but at the same time, be willing to quickly admit you’re wrong.

To help you achieve this balanced attitude, I’ve put together a few trading tips that professional traders adhere to day in and day out…

  1. Be selective. Don’t try to catch every move in every stock.  If you’re loading your portfolio with a dozen or more trades, hoping that one of them will be a big winner, you’re inviting disaster.  Have a trading plan and only take trades that meet that plan.
  1. Always have a price where you’re willing to admit you’re wrong. There are a number of different ways to do this.  It can be a simple 10% loss rule, or maybe it’s a technical point on a chart.  Fact is, you won’t be successful in trading unless you keep your losses small.
  1. Accept the truth that you won’t be right on each and every trade. Even the best traders in the world are wrong at times.  The difference between these successful traders and those who consistently lose money are that the pros quickly admit they’re wrong and move on.
  1. Have a profit taking plan. When you’re right about a trade, you need to get paid.  To do this, have price points where you collect some gains- no matter what.  But here’s a little secret- always leave a small portion of a profitable trade open.  You never know when a stock or commodity will go on a spectacular run.  It’s these big trades that really help your portfolio grow.
  1. Don’t try to be a hero by picking tops and bottoms. Over the long run, you’ll notice trying to pick the exact point where a stock or commodity will reverse higher or lower is a fool’s errand.   Instead, find the trend and trade with it.  If the trend is up, go long or buy calls.  If it’s down, go short or buy puts.
  1. Don’t get attached to your positions. This is a big one folks.  Getting emotionally attached to a stock or commodity is one of the worst habits you can have.  It always leads to big losses because you’re not willing to admit you’re wrong.  You’ll know you’re emotionally attached if you get mad when an asset doesn’t go in the direction you think it should.

There you have it…

If you’re interesting in long-term trading success, you must adhere to the rules above.

But here’s the deal- even if you’re aware of these rules, it may be hard to stick to them.

That’s where discipline comes in.  For long-term market success, you must turn yourself into a cold, calculated, risk taker.

Speaking of taking risks, here’s a bonus tip…

Professional traders always ask themselves one very important question before each and every trade…

“How much do I stand to lose if I’m wrong?”

Amateur traders ask a different question…

“How much will I make if I’m right?”

There’s a very important difference between those two lines of thinking.

Keep the rules above in mind on your next trade- you’ll be a better trader for it. 

Until Next Time,

Justin Bennett

BIO:  Justin Bennett is the head commodity research analyst at Commoditytradingresearch.com.  With over a decade of real world trading experience, he finds ways for you to consistently profit from movements in commodities and the companies producing them.  Sign up for our free reports and commodity newsletter at https://commoditytradingresearch.com/free-sign-up.

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Category: Commodity Trading

About the Author ()

Justin Bennett is the editor of Commodity ETF Alert, an investment advisory focused on profiting from the ebb and flow of important commodities via ETFs. The commodity veteran and options specialist is also a regular contributor to the Dynamic Wealth Report. Every week, Justin shares his thoughts with our readers on a variety of commodity-related topics. Justin is also a frequent contributor to Commodity Trading Research’s free daily e-letter. And he’s the editor of another highly successful and popular investment advisory, the Options Profit Pipeline.

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