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.
- 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.
- 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.
- 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.