Commodity Market Trading Strategy
Extra Financial Reference Books
Useful Reference Book(s): Useful Books about Stock Market
Once you have a reliable set of stock trading rules it is important to keep them in mind. Here is one discipline that can reap rewards. Read these rules before your day starts and also read the rules when your day ends.
Rule 1: I must follow my rules.
Naturally if you develop a set of rules they are going to be followed. It is man's instinct to need to alter or break rules and it takes discipline to act as per the established rules.
Rule 2 : I can don't risk more than 3% of my total portfolio on any one stock trade.
There are several old traders. There are lots of bold traders. But there are never any old bold traders. Defending your capital base is basic to successful stock exchange trading over a period of time.
Rule 3: I will cut my losses at 5% to 15% when I am wrong without question.
Some traders have an even lower toleration for loss. The key point here is to have set points ( stop loss ) in the boundaries of your toleration for loss. Stay informed about the performance of you stock and stick to your stop-loss point.
Rule 4 : Never set price targets.
This is a style that will allow me to get the most out of rising stocks. Simply let the profits run. Realistically, I can never pick tops. Never feel a stock has risen too high too quickly. Be willing to give back a good percentage of profits in the hope of much bigger profits.The big money is made from trading the really BIG moves that I can occasionally catch.
Rule 5 : Master one style.
Keep learning and getting better at this one method of trading. Never jump from one trading style to another. Master one style rather than become average at implementing several styles.
Rule 6 : Let price and volume be my guides.
Never listen to any opinion about the stock market or individual stocks you are considering trading or are already trading. Everything is reflected in the price and volume.
Rule 7 : Take all valid signals that show up.
Do not make excuses. If an entry signal shows up you haven't any excuse to not take it.
Rule 8: Never trade from intra-day data.
There is always stock price variation within the course of any trading day. Relying on this data for momentum trading can lead to some wrong decisions.
Rule 9 : Take time out.
Successful securities dealing isn't only about trading. It is also about emotional strength and physical fitness. Scale back the stress each day by taking time off the PC and working on other areas. A disturbing trader won't make it in the long run.
Rule 10: Be an above average trader.
So as to succeed in the exchange you do not want to do anything exceptional. You need to not do what the average trader does. The average trader is inconsistent and unruly. Ask each day, "Did I follow my strategy today?" If your answer's no then you're in difficulty and it is time to recommit yourself to your stock trading rules.
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