How Do I 'Ride the Winners' When I Trade Shares?

Submitted by Sharemarket News on 4 May, 2011 - 14:28

Learn about riding winners when share trading.

Establishing share trading winners is a process. If you're a beginner, start by educating yourself about the market. Set specific goals and formulate a trading plan. Next, start researching the stock and company. Weigh the pros and cons of each stock when picking your lineup, don't just rely on advice. Here are other suggestions:

  • Have a set of rules that has an edge and that you consistently follow. Sometimes you will lose, but capital will increase as your number of trades go up.
  • Set stop loss points and have an exit strategy. In an ideal situation, you should exit a trade when the market tells you to exit. Test different stop placements and adjust them depending on market movement. One trader sets a stop loss at a buy price of less than 5 percent after looking at the charts.
  • Let your profits ride with a high win/loss ratio.
  • Do not solely concentrate on making money, concentrate on the process. Too much emotional attachment to money can result in cutting your winners early and letting your losses run.
  • Test your strategy. A first trade can sometimes feel like a life-threatening situation. A trade on top of hundreds of profitable ones that you won because of a proven system, however, will not cause you as much anxiety. To survive, let your winners run a bit.

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