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General Trading Tips
Some general pointers:
1. If you are a first time trader, you should not trade if you are on margin (borrowed money) or if losing more than 50% of your capital will alter your lifestyle significantly (allocate no more than 25% of your total portfolio to Active Trading). You can trade on margin when you become more experienced, later; We strongly recommend you to Papertrade first.
2. Always trade with stop loss or stop buy orders to preserve capital;
3. With your stops in place, monitor price movement and take profits at levels 2-10% or above; alternatively if the trend is very strong keep the position open and just trail the stock price with your stops. See chart below for an example where protective stop orders have been used to trail a trending stock. Note how the protective stop follows the stock price in the up as well as the down trend.
4. Never take a loss greater than 5-10%;
5. Close positions for short term trades at end of day when possible. If carried overnight, make sure stops are in place before next day's open;
6. Keep track of your trades for tax purposes as well as for your own reference;
7. If you are finding it difficult to take losses, stop trading immediately and re-assess your objectives.
Remember that taking small but frequent profits is the key to your success. Do not allow greed get in your way. Similarly, do not allow small losses to become large losses - always use tight enough stops to preserve your capital.
Other trading tips:
Our selection algorithm incorporates proprietary technical analysis tools. However, there are many other trading techniques and methods of analyses ranging from the traditional to the more advanced. For further reading, here is a list of books you may be able to order from an online bookstore or directly from the publisher.
We will add more pointers to this section in future based on the feedback we receive from you.
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