There are thousands of traders making a lucrative full-time living on the stock market. There are many others who make decent money trading on a part-time basis. And then you also have a huge number of people making a loss with stock trading, because they either didn’t take time to learn the rules of the game, or they simply don’t understand them yet.
The biggest secret of trading is that you are not actually trading against anybody else. It’s not like cricket or football where you have opponents trying to eliminate you. You are fall practical purposes alone in the market and your biggest enemy is yourself. If you are the type of person who can’t stand to lose anything, you will find that when trading you will hang on to losing trades much longer than you should. This will inevitably turn small losses into big ones. Similarly, if you are too scared, you will cash in on winning trades much too soon. The end result of all this? Numerous small profits countered by a couple of large losses.
To become a success as a trader you have to learn to ‘let profits ride’ and cut losses before they become too big. To do that you will have to learn self discipline and have a set of trading rules to which you stick at all times.
Luckily there are a couple of techniques that can help you to do this. If you always go into a trade with a pre-set stop loss level, and you stick to that rule, you will always exit the trade before you can lose a lot of money. And if you never enter into a trade without a take profit already set, you will be able to patiently wait for the trade to mature to its full potential.
The next important step you have to take is to educate yourself. Learn how the various technical and fundamental indicators work. Study how they are influenced by different types of markets. Then get yourself decent trading software with the ability to chart all the different indicators.
Once you have learned self-discipline and you are familiar with the rules of trading, stock trading will become both pleasurable and profitable.
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