By Mark Crisp Platinum Quality Author
Think stock market trading and you see images of pin-stripe suits, leather brief cases and the sweet smell of money. Of course there is also the vision of Gordon Gekko, the fictional version of a cut-throat Wall Street manipulator. Is the secret to stock market trading known only to these insiders? No, this secret is available to any investor if you practice the essential elements.
Element of Reality. Applying the secret to online stock trading starts with planting feet firmly on the ground. Profits can be made fast and fortunes lost just as fast. Online trading may have the same stomach turning impact of piloting a supersonic jet, but even jet pilots have to know how to land safely back on earth. Online stock traders have to accept that winning and losing depends on factors outside of your control. And when you lose, traders need to bounce back quickly and get back into the market.
Element of Learning. Traders can be so busy reading reports and newsletters that they fail to learn from the best teacher of all, experience. Every investment whether a winner or a loser presents a valuable lesson. In learning from experience, the secret is to examine the emotional as well as technical aspects of the trading decisions. When traders acquire a strong sense of self checked by motivations, they discover influences on trading that hidden beneath the surface. Don’t be surprised if you learn more from your losses than from winners.
Element of Suspense. Online stock traders must be ok with uncertainty. The best research and an ideal stock choice can be turned upside down with the impact of external events, government policy changes, oil prices or just about any world crisis. Successful traders enjoy the game. They thrive on responding to the unexpected and savor profits rescued from crisis all the more. Traders who can’t take suspense need to go for long term buy and hold strategy or just drop their cash into a mutual fund and let the pros manage it for them.
Element of Flexibility. The stock market is a fluid environment. Online stock traders, who are ready to go with the flow, even if it means tweaking their trading strategy, respond most effectively to market swings. Projections are merely the hoped for scenario. For day traders it’s particularly important to be flexible, accept any losses and get back on track after adjusting the market changes.
Element of Confidence. Online trading fluctuations can cause traders to doubt their strategies. Losing money in the market does not make you a loser. Keep a clear separation between what you do and who you are. Online traders who maintain strong belief in their system, research and instinct get back in the winners circle faster than traders who are driven by emotion.
Traders who combine these elements are on the way to mastering the Secret to stock market trading success over the long haul.
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If you are a beginner in stock market investing, the best course would be to first try learning by trading on a mock portfolio. Even if you do not set target on your profits, you must set your stop loss limits.
You must learn to structure your portfolio on the basis of how frequently you need the income flow and the capital return. You must also determine the composition of your portfolio on the basis of your age, status in life, your sources of income and above all your risk appetite.
It is always advisable to follow the age old wisdom of not putting all your eggs in one basket. In other words, you must learn to diversify your portfolio. It must also be noted that diversification should not be resorted to for its own sake. According to Warren Buffet, wide diversification is only required when investors do not understand what they are doing.
Your broker may remain to be your guide in investing in stocks and shares, but you must ultimately try to build up your own methodology in trading or investing. So you must learn to track the movement of the prices of your stock rather than depending upon the signals provided by your stock broker. Remember, it is your own money that is at stake.
The best principle in managing your stock investments, as said earlier, is to fix and stick to the buy and sell targets. It is better to sell off your stock when you have reached your target even if its price appears to be shooting skywards. You do not know when it may fall all of a sudden or even wipe off your lower targets. Set small goals, because they are not difficult to achieve.
Most investors lose in the stock market because of their greed and the fear of making loss. They keep waiting for the highest price and do not sell. Similarly investors are afraid to book a loss that they have already suffered and in process are forced to sell at still higher losses.
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