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3 Simple Techniques

Once you sort through all the trading jargon and strategies, making a good stock trade is much easier than people tend to make it. In other words, most people make stock trading harder than it needs to be.

After all, when trading we are generally dealing with thousands of dollars per holding, so it can be easy for traders to continually second guess and put pressure on themselves before finally pulling the trigger.

Below are 3 simple techniques that will having you making good stock trades more often than not.

  1. Create an entry point – Where is a good spot to buy the stock? Based on your strategy, this could be after a breakout, after a pullback, and so on. Once you choose an entry style stick to it and use it every time.
  2. Create a failure point – This is also know as creating stop losses. Basically determine the eject button before entering the stock. Based on your analysis, this should be the price where the trade is considered a bust when it falls below that price.
  3. Create a price target – It is easy to say a stock will go up, but when do you know when to sell? Are you necessarily tying up your capital in a stock that already saw its boost? By creating a price target before entering a stock, you better utilize your capital as you collect gains and move on to the next stock.

That’s it! Yes, it is really that simple, by determining these 3 critical points, the hardest part of stock trading should be deciding how to spend all that money you made.

Continue to tweak and perfect your criteria for determining these critical points, and eventually you’ll master a surefire trading system.

Ten overriding principles

  1. Always live to fight another day
  2. Entries must have a statistical edge
  3. Patience and discipline
  4. Be a jellyfish (swim with the current)
  5. Trade only liquid securities
  6. Focus on trying to capture the middle 80% of a move
  7. Know your exit points when you open a position (and stick to them!)
  8. When in doubt, reduce position size by 50%
  9. Limit losses to 2% of total equity for any single trade
  10. Start each day with a clean financial and emotional slate

The above list is relatively generic, but it helped provide me with a framework for organizing how I would approach trading as a business, what strategies I should adopt, how those strategies should be executed, and ultimately defining what success should look like.

Trading rules are vitally important – as is knowing when they should be broken. Even more important, I believe, is the process that one goes through in order to arrive at these rules and to make sure that as new market situations unfold and new blind spots are revealed, the rules and guidelines are enhanced to maximize the opportunity for the trader to continue to grow and develop.

Shanghai Composite :Chart looks scary !

-Above is the Monthly chart of Shanghai Composite.

Just watch 2956 level  very closely.Three Consecutive close below this level +Weekly close will take to 2821-2776 level.

Break and close below 2776 ,Nonstop slide upto 2640-2595 level.

Trend Reversal will be above 3200 level.

I will Update more (Next week ).

Updated at 12:42/23rd April/Baroda

What is the Most Expensive Investing Book?

The most expensive investing and stock trading book is Margin of Safety: Risk-Averse Value Investing Strategies for the Thoughtful Investor, which you can pick up a new copy of on Amazon (AMZN) for $1,749.00. The book was written by Seth Klarman, the successful founder and president of the Baupost Group, a Boston-based hedge fund. The book has a rating of four stars based on customer reviews and was published by HarperCollins in 1991.