"How Much do I Invest"
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We need to tighten up our act. Too much left to chance is
the recipe for a dangerous result. Tightening up means we
make rules as to "HOW we will play this game" and we stick to
them.
Money Management - Your Ticket to Profits
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If your account is $10 000 then you will have a very good idea
as to how much you will place on any (one) trade. A rule I've
adopted for a small account is an allowance of 10% on any one
trade. You will trade in parcels of $1000 and you will only
suffer a maximum loss of 10% of that trade.
Thus you will trade with a $1000 and you will cap your loss at
$100. You will quit the trade if you lose $100. Now you need to
be comfortable with your rules so I offer mine as your guide -
you decide what your rule will be.
In other issues I have mentioned the sort of return you need if
you make a 10% loss or a 50% loss.
Look at the returns needed just to get your money back:
10% loss.....................11% profit required
50% loss.....................100% profit required
A wonderful resource by David Jenyns will help you
fine tune your trading tactics and help you adjust
the size of your trading positions.
Follow the link:
http://tinyurl.com/4xml6I also suggest you start buying and selling shares(stocks) to
get some experience in trading without the volatility of other
instruments like - options, warrants and futures.
Work on profitable stock trading and then learn how to trade
other things. This gives you confidence and also gives you
time to learn and experiment without too much damage.
To prevent serious loss don't trade unless someone is able
and willing to provide you with a "stop loss". It is hard to
get the ideal broker but you do want to increase your chances
of success and "stop losses" are VERY IMPORTANT part of your
system.
Ring the brokers and ask them whether they provide the service.
Discount brokers are preferable if you have a small account
otherwise the cost will eat your profit. You don't want
circumstance to push you into placing MORE than your 10% into
the trade. So do the numbers and don't worry about broker
advice - your system is your advisor..got it?
I've mentioned it before and I'll give you the link here. Mark
McRae has created, "Trading For Beginners". He gives a very
good explanation of trading basics. I love my copy! He is on
the ball with his introduction into technical analysis.
Understand, if we were rational and unemotional the stock market
probably wouldn't exist. Instead we are blessed with a means
to earn a superior living, without the 9-5 routine!
Now you make sure you get your copy and read it..okay! Just
before I give you the link make sure that when you get your
copy you don't skip - "stop losses" on page 70.
Here it is:
http://tinyurl.com/2k29qThis resource is essential for starters. I wouldn't stop with
this one but I mention it because it's easy to read and
understand. The next one to read is this one:
"The way to Trade"
http://tinyurl.com/2fgrvWe are going from learning the basics to the nitty-gritty of
applying what we learn. Take your time. If you know your stuff
and feel comfortable with it you can make your cash very
quickly - believe me. So don't neglect these resources if you
really want to succeed.
"The way to Trade" has been a huge hit! Remember when you study
any of this material you are benefiting from many years of
experience and a great volume of trades conducted by these
traders. You will never be able to replace experience so that
is what you are really paying for.
The basics remain basics unless you learn HOW to apply the
information. Knowlegde is useful, followed by a trading system
you understand. Test every concept on paper first without
"risk".
You will need a way to get end of day prices either from the
paper or some data provider and then chart by hand or use
computer charting packages to draw your price charts, with
technical indicators to help you analyze the price chart.
Find a system - something you are comfortable using and build
your skills over time. I have been doing my own swing charts
and also using Metastock with technical indicators.
I use a variation of the "123 System", to time my writing
strategies.
(You can get the "123 System" and 20 other bonuses bonus by taking up the offer - see
the author bio link.)
Now if you are following a stock make sure you get to know
it's every move. I would suggest you only follow ONE stock.
The reason is that you will start to understand it better
and you will become more successful trading that stock. The
same goes for any other trading instrument.
You should be paper-trading before you put any money on the
line. Don't choose specs for this exercise....
trade big companies...top 20, top 50, top 100.
You need volume and liquidity so check the numbers and make
sure your chosen stock has a BIG following and is a profitable
company.
Build Your Trading Skills Use The Resource List:
1*Knowledge of the basics - not just technical analysis
"Trading Secrets Revealed" is a step-by-step trading roadmap
that designs excellent money management.
http://tinyurl.com/4xml6"Trading For Beginners"
Reducing risk via position sizing(how much do I invest)
and applying stop lossess.
http://www.surefire-trading.com/sft.php?offer=tutorxt007&pid=12* Using a trading system you feel comfortable with - testing
it out thoroughly before investing money.
Learn About Trading Systems
http://tinyurl.com/2fgrvGet Trading Plans
http://tinyurl.com/4ehhs3*Starting off with stocks and building your skills and your
knowledge and then trying out other instruments.
"How to Trade the Futures Market"
http://tinyurl.com/2rcxzRegards,
Joseph Sgro
THE 10 Simple Rules Ezine
http://www.tutorhelp.com.au/ezine.htmlP.S. Happy reading!!
http://www.tutorhelp.com.au/BLOG.html==================================================
Copyright(C) Joseph Sgro 2005
Further this discussion by reading:
"10 Simple Rules to Make Serious Money in
the Sharemarket and Keep it!"
http://www.tutorhelp.com.au/sharemarket.htmlFor more articles:
http://www.tutorhelp.com.au/articles.html==================================================
About the Author
Joseph Sgro started THE 10 Simple Rules Ezine is an paid subscription
ezine as a way of telling people how to avoid the same trading errors
he made.
He states, "My education has been expensive and if you do things right
you will get educated cheaper than me".
To read his story and get his "learn to trade package" go to:
http://www.tutorhelp.com.au/sharemarket.html
