The 5 Golden Rules Of Money-Making Trading And Investing

By: Sam Gurarenova

Be Self-Disciplined. Investing with control will put more cash on your bottom line and take less money out. The one continuous reality in regards to the markets is that discipline = greater profits.

Be Disciplined Constantly. Remaining disciplined is essential, but it's not a at times matter, like saying you quit a bad behavior, such as cigarette smoking. In the event you claim to quit smoking however you sneak a cigarette once in a while, then you definitely haven't quit smoking. When you trade with discipline nine out of ten trades, then you can't claim to be a disciplined investor. It is the one undisciplined trade that can really hurt your overall performance for the day. Discipline should be put to use on every trade.

Lower That Trade Size When You Are Trading Badly. Great investors follow this principle. Why continue to lose a similar amount on trade after trade if you could save yourself a lot of cash by reducing your trade size on your next trade? We all have winning streaks and losing streaks. When you are in a losing streak, decrease your trade size. If I have two losing trades in a row, I always lower my trade size down. If my next two trades are profitable, then I move my trade size back up to my original size. It is just like a batter in baseball that has struck out his last two times at bat. Next time up he will choke up on the bat, shorten his swing and then try to make contact. Trading is similar: reduce your trade size, try and make a tick or two or even scratch the trade after which increase your trade size after two back to back winning trades.

Never Turn A Winning Trade Into A Losing Trade. Most of us have violated this principle. Still, it has to be our end goal to try harder to not break it in the future. What we are really preaching about right here is the greed aspect. The market has honored you by moving in the direction of your position, even so, you are not pleased about a little winner. Hence you hold to the trade hoping of a much larger gain, only to watch the market switch and move against you. Obviously, predictably you now wait and the trade further deteriorates into a major loss. There isn't any need to be money grubbing. It is only one trade. You will make lot's more trades during the entire session and much more throughout the next trading sessions. Opportunity is out there in the marketplace constantly. Try to remember: No one trade should make or break your performance for the day. Avoid getting greedy.

Your Greatest Loser Must Not Surpass Your Biggest Winner. Keep a trade log of all your trades through the entire session. If, for example, you already know that, thus far, your greatest winner on the day is 5%, then do not allow a losing trade to go beyond that 5%. Should you allow a loss to exceed your greatest gain then, effectively, whatever you have when you net out the biggest winner and greatest loss is a net loss on the two trades. Don't do that.

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