Stock Market Lessons

My stock market lessons

Once you’ve bought a stock you need to keep your eye on it.
At the very least, you should analyze your stock charts and major market indices once a week.

If your major market index drops below its 200-day moving average, it’s time to raise your stops and monitor your stocks carefully.
Monitor your market index in relation to its 200-day MA.

There are plenty of stocks to choose from. Why not buy only the best stocks?

Stocks in strong uptrends with good fundamentals make good trading candidates.

You can still make money when the overall market is in a long-term downtrend, but the odds aren’t in your favor.

Don’t buy stocks with poor daily traded volume. You might not be able to sell when you need to because there isn’t enough buying for you to exit your position.

You only make money when you sell.
Find a stop-loss strategy that makes sense to you. Sell when your stop-loss is hit.

Find a trading system that is a good fit for your circumstances.

• Available time
• Skill level
• Amount of money to invest with

You may find technical indicators to be helpful but remember that price is the most important thing on a stock chart, with volume the second most important.

• All that technical indicators do is convert the Open, High, Low, and Close price and volume into a graphical representation of price and volume. They aren’t magic and should only be used to confirm what the price and volume action on the stock chart is already telling you. Use them carefully.
• You don’t need technical indicators to trade. You can trade just as well without them.
• Technical indicators can be useful when you are performing technical scans to find stocks with favourable chart patterns.
• Limit the number of technical indicators you put on a chart. Too many indicators leads to confusion because they give mixed messages

Create a trading plan and follow it.
Without a disciplined approach, success will be difficult. A trading plan ensures that you have covered all your bases and left nothing to chance.

Document your trades so that you can learn, improve and become more profitable.

Learn as much as you can about stock trading and practice, practice, practice.

Try different trading systems - test them thoroughly. Use one of the free online charting websites if you don't own a charting package. Practice the system and then record your results in a spreadsheet. Determine which systems are the most profitable.

Concentrate on money management.
I know it’s not as exciting as trade entries and exits, but it is crucial to your success. Make sure that you understand the mechanics and can apply it practically.

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