| 1. Keep an eye out for an "educated buy." | | | | do. With the proliferation of online information, |
| If there is a particular stock that is at a low price but | | | | everyone can have access to charts, up to the |
| is being traded in an unusually high volume, there is | | | | minute stock prices, and company announcements. |
| probably something that those trading this stock | | | | These same trader's also have losses, but their |
| know that you don't. Find out ways to establish what | | | | effective use of the information available to them |
| information they have that you don't. | | | | gives them the edge in profitable stock trading over |
| 2. Have protections in place if the value of a stock | | | | those who are not effectively using the same |
| lowers. | | | | information. |
| Whilst I applaud you for engaging in profitable stock | | | | 6. Buy on the rumor and sell on the news. |
| trading, you must remember that every time you | | | | Sometime's you need to buy as soon as you hear |
| invest in the stock market there is an element of | | | | that rumor. For example, if you hear about a |
| risk. What will you do if the stock you have invested | | | | potential takeover bid of a company, you want to |
| in plummets in price? | | | | get in whilst the stock price is low because it will rise. |
| To help protect yourself, you must decide how much | | | | The same is not true for selling though. Stock trading |
| you are prepared to lose before you invest. This is | | | | is not for the faint-hearted and should be treated as |
| an essential part of any trading plan. | | | | a long-term investment. You should not jump ship at |
| A commonly used tactic is the stop-loss. This is a | | | | every little jump in the road. |
| floor price that you will sell a particular stock at | | | | 7. Work out your entry price and exit price first |
| before you lose any money. A common amount for | | | | before buying your stock. |
| many investors is a price 5-10% lower than they paid | | | | You shouldn't just buy a stock at any price. For |
| for the stock. | | | | profitable stock trading, you should work out what a |
| 3. For profitable Stock trading, you should look at a | | | | stock is worth to you and only buy if it is below that |
| combination of growing your capital, and finding the | | | | price or it gets down to that price. |
| best returns. | | | | You should also have sell prices, for both if the stock |
| The total amount of money you have to trade, your | | | | increases in value, and if it decreases in value. Stock |
| capital, should be spread between low yield and low | | | | prices can be cyclical, so it may be in your interest to |
| risk "blue-chip" stocks, and other stocks with the | | | | sell stocks at the height of a boom, buy again if the |
| ability to give higher returns but are possibly higher | | | | price goes lower, sell when it goes higher again; and |
| risk. | | | | so on and so forth. |
| 4. Write down your trading plan. | | | | 8. Diversify your portfolio. |
| You may have a detailed trading plan in your head, | | | | As previously mentioned, there is a risk in investing in |
| but you should write it down. This helps you identify | | | | the stock market. Don't put all your eggs in the one |
| the goals of your profitable stock trading plan, and | | | | basket. Spread your capital across a variety of |
| makes you more likely to stick to your plan if things | | | | stocks. You may find that as one stock depreciates |
| change. | | | | in value, another is appreciating in value. This |
| 5. Every trader has access to the same information | | | | minimizes your losses and leads to more profitable |
| There are many successful traders out there who | | | | stock trading. |
| have access to exactly the same information as you | | | | |