9 Top Trading Tips

These are top ideas in which many professional traders have learnt about the markets and trading through years of trading experience. One of the problems with preparing a list such as this is that many important points now operate subconsciously to the experts.

An important point is that what we do well, we do subconsciously, what we do badly we do consciously. These stock market tips should help any trader, but there will be many other lessons left to be learnt.

Trading Tips

  1. Always minimize risk in every way you can. Read though the 10 tips to eliminate risk.
  2. Always trade against some kind of reference point. A reference point is one at which you might decide you are wrong and get out depending on what action is seen at that point. This is particularly true if you are seeking to short a rally, or go long into a decline wait to see some from of reversal before going in, or use a previous reference point (even then it is better to wait for a reversal).
  3. Stay with positions unless you see something which definitely changes your position. Follow these facts:
    • A short-term signal does not negate a longer term one and to take action on such is absurd.
    • The short-term signal in the first place is probably just an illusion.
    • Even if some sort of reversal does come in it will not often challenge the longer term signal.
    • There are, of course, other factors which could influence you to get out of a good position early. But you need to realize that once in a profitable position you start to fear a reversal – this fear becomes a powerful motivator to get you out of the market. You need to learn how to deal with this.
  4. It is generally best to wait for some form of confirmation before adopting a position, certainly if buying near highs or selling near lows. So if there are only a few points involved wait for them, don’t anticipate. This factor is not needed if you have some other form of confirmation at a slightly better level.
  5. Whenever you enter a position know at what level you would get out and at what level you would hedge (if appropriate). Make sure you have clearly determined your investing objectives.
  6. Develop a methodology, or trading strategy, which suits you. Once you have done so keep a careful record of your results and in particular the instances where you did not have sufficient discipline to follow your strategy. Understand why these happened. Use your success rate to build a carefully defined trading system.
  7. Know when to break the rules. This of course confuses the issue but trading is an art not a science and sometimes this rule is necessary, but it is generally best ignored.
  8. You will learn as you trade with a disciplined approach that the most important factor in your trading is: You. Work will be required.
  9. You have got to learn to let profits run, you do not have a profit until you can move your stop to lock a profit in. Even then overnight gaps (or after-hour trades) might prevent your stop from working.

Our Stock Tips Advice

Long and short directional positions are generally better than balanced positions. This stock tip list has some general trading points which will be useful to all traders. Low risk trading opportunities are essential.

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