“Commodity Stock Trading – Learn the trading applications and golden rules of stock trading”
Some Commodity Stock Trading Application rules are made to be broken, however there are some rules are meant to be followed. While trading, here some of the Stock Trading Application rules that I consider the most important principles of trading. So, I suggest that you make a copy of them and place them in your trading diary or tape them to your desk. Because, you need to follow them always.
Commodity Stock Trading Application 1
‘Cut Your Losses’
Never let your losses get out of your hand. This is one of the most important things that you can do to ensure you are successful. It is true that, losses can devastate you emotionally and will diminish your trading capital, even it will violate your primary aim in trading. And if you could get successful traders to credit their success to one-thing, many would select this rule.
Commodity Stock Trading Application 2
‘Let your Profits Run’
The second rule is to – let your profits run. Probably, your trading plan will produce profitable trades less than half of the time. That’s why, you need to make sure that when you do achieve a profit, and you get the most out of the move in the stock. However, some up trends take time to develop; but you must wait until you see the high in the stock achieved and then the reverse in direction before you consider closing the position of the trade. Until you see the reverse, you won`t know if the stock is going to go any higher. Note that, your few profits must outweigh many losses.
Commodity Stock Trading Application 3
‘Follow the Trend’
Trends are the only friends you have in trading. Always trade with the trend, and never attempt to identify the bottom in the stock or time your entry using that approach. And if you do, you can be run over as the stock continues on its way down. However, there is often great force and momentum at work when a stock is trending in either direction particularly when the trend is down. Remember, don`t try to fight with it. Think! Why buy something that is heading in the wrong direction on the hope that it will turn around and head back up past your entry level?
Commodity Stock Trading Application 4
Don`t trade for the sake of trading and never force the action. Don`t open a position If you are not comfortable with any of your potential trades. It is a mature decision to do this when conditions aren`t quite right, and you won`t be trading for the wrong reasons.
Commodity Stock Trading Application 5
‘Never Act on a Tip’
Who hasn`t reacted to a tip they heard from somebody about a stock that is apparently going to the moon and never coming back? Remember, never act on a tip; tips are rarely good. Actually, the worst part of tips is that you will probably stick with the trade even when the security starts to head against you. In fact, you will be more inclined to break the commodity Stock Trading Application rules and not cut your loss because of the ‘reliable` information you have heard about the stock`s futures. Instead of trading on tips, keep confidence in your own plan.
Commodity Stock Trading Application 6
‘Always Trade Liquid Stocks’
It is a horrible feeling of helplessness to be stuck with a stock that you need to exit from because there aren`t enough buyers in the market of trading. Liquidity is the ability to trade in a security without adversely affecting its market value. Always demand liquidity in your securities before you consider trading them, and you`ll never be stuck with a stock.
Commodity Stock Trading Application 7
‘Keep Positions Small’
When trading, you need to understand and manage risk to achieve long term goals. If you want to avoid risk completely, then don`t commit any money to any financial market available to you. If you are prepared to take some risk, then managing and controlling that risk will be more crucial than ever. One of the best ways to do this is to ensure you have a good position sizing model, which will ensure that you don`t commit too much of your trading capital to a single position, allowing you to spread your risk across several positions.
Commodity Stock Trading Application 8
‘Don`t Buy Something because it Looks Cheap’
If a stock is cheap, probably there is a very good reason for it. Remember, only consider stocks that are trending up. And there is no such thing as a stock that might start to trend up any day. If a stock looks cheap to buy, who is to say that it will not get cheaper over time? It may never increase in price again.
With these commodity Stock Trading rules, a solid trading system and a good money management rule, can make become successful in trading business. Remember these commodity Stock Trading Application rules and use them in real time. Particularly when you don`t want too.