| For anyone learning how to trade stocks, it is | | | | range of loss that can be tolerated by traders who |
| important to know the difference between investing | | | | have the discipline, so the correct move is to sell and |
| and trading in the stock market. | | | | move on, there are usually other opportunities to act |
| The discussion here is directed not to the investor | | | | upon. |
| but to the neophyte trader, someone who has yet | | | | Good traders practice good risk management by |
| to learn fully how to trade stocks, one who is | | | | limiting losses when they are wrong and letting |
| contemplating putting their own money at risk. A risk | | | | profits run when they are right. |
| that can only be minimized by following some | | | | There are many reasons why stocks fluctuate in |
| practical guidelines, frequently cited but frequently | | | | price over time and it is the objective of the trader |
| ignored in the excitement, success, failure, or greed, | | | | to buy or sell stocks in order to profit from those |
| that is ever present in the arena of stock market | | | | fluctuations, to buy stocks at a lower price from |
| speculation. | | | | which they will rise and/or to sell stocks at a price |
| The trader is usually much more active than an | | | | from which they will fall. In this way, when |
| investor in buying and selling stocks, holding the stock | | | | transactions have been completed, if a satisfactory |
| positions for shorter periods in the attempt to take | | | | overall profit has been achieved, a profit at least |
| gains when they do occur or to minimize the | | | | equal or close to the planned target profit, it can be |
| inevitable loss that is part of speculative trading. | | | | considered that the objective has been met. |
| Yes, significant financial gains can be made when | | | | There is no formula that can guarantee a profit and |
| trading in the stock market, even to the extent that | | | | successful traders accept the fact that they will |
| an individual can become financially independent. | | | | indeed make losing trades as well as profitable trades. |
| But of course, it can also be said that one can start | | | | Obviously, the need, as far as possible, is to minimize |
| with a fortune and end up with the proverbial | | | | the losses and to maximize the gains so that the |
| shoestring. It takes time and effort to learn the | | | | overall end results will be shown to be profitable to |
| fundamentals of stock trading and a lot of willpower | | | | the degree that the return on the monies at risk will |
| to follow sensible guidelines to manage risk and take | | | | be greater than if they were invested in any other |
| the necessary action called for in those guidelines. | | | | legitimate endeavor. |
| Early on one realizes that it is difficult emotionally to | | | | Wise advice for the beginner is to spend $16.95 and |
| take a loss. When faced with the need to act, to sell | | | | buy William J. O'Neil's book "How to Make Money in |
| a losing position, the temptation is to just hold for a | | | | Stocks: A Winning System in Good Times and Bad". |
| little while longer, "maybe it will recover" is the | | | | Anyone seriously wishing to learn how to trade |
| thought that overrides the guideline that indicates | | | | stocks profitably ought to read this book. |
| "sell!". That guideline would have set a percentage | | | | |