Although there is rarely a hard and fast rules about trading stocks, there are a few tips that are so fundamental to stock trading that they do not know will undoubtedly lead to some damage to your portfolio. These five tips are among the most widespread mantra guru, who trade stocks for many years.
Know your time frame
If you are going to buy a stake in the company, you must have a concrete idea of how long you plan to hold that stock. If you buy it because you like the company's long-term prospects and really think you can hold it for at least 10 years, and then hold it for at least 10 years unless the company's history changes.
Beware of the Cross death
"Death Cross" is a term from technical analysis, which is the study of past market data, primarily price, volume and momentum to assist in forecasting the direction of prices. This happens when the 50 day moving average share price crosses below the 200 day moving average. This often involves the supply is in a serious downward trend, from which he can not recover some of the time.
Let your winners run
If you hold a stock that is doing very well and has increased in price as you bought it, if the history of the company has changed, not to sell the shares. The key to successful investing is to buy low and sell high. The key to successful investing quite have enough confidence in the reasons you have invested in the stock in the first place, so if things are even better than you expected to stand back and let the market reward you.
The trend - your friend
it all goes back to the first law of motion that you may have learned in your high school class of Newtonian physics, "an object in motion tend to stay in motion. An object at rest tends to remain at rest." In other words, the momentum is very real thing in stock prices. As stock moves higher for any given period of time, it tends to attract more money and accumulate in other investors and tends to move higher. news ahead of this fund is distributed, and more accumulation takes place, sending prices higher. The same applies to the the opposite - a stock that goes down over a period of time often continues to move downward. So follow the trend. If you own stock and the trend above, expect him to continue higher. If you do not own it yet, but saw it, it can be good time to buy. Today, thanks to online stock trading, you can immediately enter a buy or sell order, and it is made in seconds, so you do not miss the greater tendency than necessary.
At some point, of course, stop the trend. But the stock market to buy low and sell high, do not buy the exact bottom and sell at the top accurate. Once a trend is a plateau, is the momentum. It may be time to sell.
Do not get emotional!
This is the single most important rule of all stock trading. The more mechanical, you can make your approach to trading, you will be better. Having a hard and fast rules, such as deadlines or target price for each investment, and stick to them, Remove emotion from the equation. The greatest threat to the subjects - the emotion. Emotions lead to irrational decisions you make, or worse, a panicked one. Once you start, irrational decisions, it becomes very difficult to get back to rational frame of mind.
That's why you see the market crash from time to time. Investors began to panic when they see not only their stocks fall, but the entire market. This raises concerns that if everything else is, you should be, too. However, if you have a disciplined approach to trading, you can stand still and wait for an amazing deal to develop.
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