1. Follow the Rule of Three. The rule of three simply states that a trade will not be made unless you can carefully find out at-least three reasons for doing so. This eliminates trading from an indicator alone.
2. Keep Losses Small. It is vitally important to keep losses small as all of large losses began as small ones, and large losses can put an end to your trading career.
3. Adjust Stops. Also called "Trailing Stop-Loss". When a trade is working your way, move your stop loss up or down in order to lock in gains.
4. Keep Commissions Low. There is a cost to trading but there is no reason to overpay brokerage fees. A discount brokerage is just as good as a premium brand name one. Costs can eat out your share of hard- earned profit.
5. Amateurs at the Open, Professionals at the Close. The best time to enter trades is after lunch when the professionals are looking to get in at a better price than one provided in the morning.
6. Know the General Market Trend. One of the most important things to be kept in mind while making a decision to trade. It is nothing but the market sentiments, as to whether the market is bullish or bearish. When trading individual stocks make sure you trade with the general market trend or condition, not against it.
7. Write Down Every Trade. Noting down of every trade will help you to make a record of your trading history, as what were you thinking at the time of initiation? Doing this will allow you to learn what is working and what is not. It will also help you determine what types of trades work best for your personality.
8. Never Average Down a Losing Position. Averaging works while investing not in trading. It is a loser’s game when you add to a loser. You add to winning positions because they are winners and are proving them to be such. In short run, very often the trend reverses.
9. Never Overtrade. Over trading is a direct result of not following a well thought out plan, but a result of emotion instead. This will do nothing but cause frustration and a loss of money. Always take positions on the basis of well thought out plan with a target & stop loss.
10. Give 10 Percent Away. Money works the fastest when it is divided. When we share we prime the economic pump of the universe. Never ever take a loss in excess of 10% of your capital. This will give you the chance to trade more & recover.
