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5 Trading Rules to Improve Your Stock Market Results

Guest post by: Gary Kerkow

Article Overview: Following the proper trading rules can make you a fortune. In this article, you will learn some very successful rules, to help you achieve great stock market success.

5 Trading Rules to Improve Your Stock Market Results

What it takes to become a winner



To consistently win in the stock market takes time, hard work, strong discipline, patience, and years of proper trading education. One of the biggest obstacles is learning to deal with human nature. Emotions such as greed, fear, and hope have taken many traders down. A good way to deal with human nature is to follow a set of successful trading rules. Once you begin to do this, your stock market results will improve.

1. Keep losses small



Part of the golden rule of trading states to cut your losses short. To be successful in the long run, you must implement solid money management. This means keeping all losses small. Not only will you save your trading capital, but your psychological capital as well. Successful trading certainly is not easy, and requires a special mentality. This type of trading mentality goes against normal human nature. Your mind must be trained to think like an elite trader. Abiding by proven trading rules can help you in this important process.

2. Trade with the trend



Your stock market results will automatically improve if you trade with the trend. This is one of the more important principles of success. An up trend is defined by, a series of price movements where higher highs, and higher lows form a pattern. The basic principle of successful trading is to only buy a stock that is rising in price. Do not try to pick a bottom or top of any price movement. Always wait for confirmation that a trend is in place, then take appropriate action. This is one of the key trading rules.

3. Beware of a down trending general market



When the general market is in a down trend, the odds of making money are small. The only way to make big money in a down market, is to expertly short stocks, or the general market itself. This is difficult, and takes a lot of specific trading knowledge to pull it off. For most traders, the best bet is to stay out of a down trending general market. A down trend is a series of lower highs, and lower lows. Just by staying out of a down trending general market, or at the very least, not making any new stock buys, your overall stock market results will improve.

4. Watch stocks within 10-20% of their all time high prices



Some trading rules are harder to follow than others. This is because of the way our brains are wired from an early age. We are taught to buy the bargain, and look for the great deal. This simply does not work well in the stock market. It is best to buy stocks that are moving up in price. They tend to have winning characteristics. This includes a clearly visible up trend. When a stock is in an up trend, it eventually will correct, and build a basing pattern. When the stock breaks out to new highs from the basing pattern, at that point we should be looking to buy it. You want to see very heavy volume on the breakout. This will give you excellent stock market results.

5. The market fools most of the people most of the time



It is important to realize the stock market is set up to take your money. The powers-to-be have pretty much perfected the whole process, including the use of psychology. They do not want you to be realistic. The buy and hold mentality fits right into the plans of the powers-to-be. You can beat the stock market, the futures market, or any other trading venue, if you follow the proper trading rules. The golden rule of trading is very clear. It tells you to cut your losses short, and let your profits run. If you follow this rule, and let other winning rules guide you, the stock market results you achieve will be incredible.

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Article Tags: stock market results, trading rules



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