What is your best piece of stock trading advice?
The above is a question I get all too often. Trying to pinpoint the BEST advice is like asking how much is too much money – everybody has a different answer and none of them are necessarily wrong.
So instead of just sharing my input, I decided to seek out some of the best traders I know and beg them for their best stock trading advice. Below is the compilation of that greatness.
Thanks to all the contributors for their input. Make sure to check these people out on their website and/or twitter.
Damien Hoffman, Co-founder of WallStCheatSheet.com
The Holy Grail of investing/trading is risk management. If you don’t have an exit strategy or proper position sizing, you are gambling. I recommend all traders spend 90% of their time perfecting risk management, and success will come with time.
Howard Lindzon, CEO StockTwits.com | twitter @howardlindzon
Cut losses, cut losses, cut losses. If I followed my own advice, my email would be unlisted or a hawaii address.
Timothy Sykes, timothysykes.com | twitter – timothysykes
Cut losses quickly, take gains quicker when the investment doesn’t act EXACTLY the way you expected it to.
Jim Gobetz, Aiki14 Market Sense | twitter – @aiki14
If I could give just 1 piece of advice to traders of all levels it would be to know, and trade within, their comfort zone. One should be physically and mentally comfortable going into any trade. This allows for the maximum clarity of thought and the best decision making. This involves everything from a comfortable workstation, to limiting the size of trades to that which you can make without excess fear. It means not trading if you are experiencing anything that puts you off your game. If you are not 100% physically or mentally you are at higher risk of making errors. This is not to say you must be a triathlon runner and Zen master, but it does mean if you just had gum surgery or your wife emptied the bank acct and took the kids to Guatemala you should consider taking some time off.
Kunal Desai, Co-founder Bulls on WALLstreet | twitter @kunal00
Lot of good stock pickers out there millions. Thats 1 percent of trading. Trade management/position management thats the next level stuff that takes you from doing this as a hobby to a living.
Leigh Drogen, LeighDrogen.com | twitter – @ldrogen
The number one piece of advice I can give is this. Know your trading strategy and stick to it. Think of yourself as a baseball player. Not all hitters hit for power, some go up to the plate with the intention of hitting singles and stealing bases. Each player knows what type of game he plays which makes him successful, there is no one right way about it. Know your strategy and master it.
John Lee, Charts Gone Wild | twitter – @WeeklyTA
Be self-aware and willing to adapt to change.
Evan McDaniel, HedgeAccording.ly | twitter – @sellputs
2. Never risk more than 5% of capital scalping or 10% swing on any trade
3. Understand how to profit from high implied correlation in the equity markets
4. Have the correct technology and real time news sources
5. Do not double down
6. cut your losers at a predetermined point.
7. always have a profit goal in mind
Rahul Sood, Co-founder Bulls on WALL Street | twitter – @stockgod
Don’t buy on margin. Ever.
The 15 minute rule:
If your stock breaches the high of the first 15 minutes, it is likely to continue upside for the day.
If your stock fails the low of the first 15minutes, it is likely to continue downside for the day.
the only caveat here is that your 10 day ema must have slope (it cannot be flat for this 15minute rule to hold).
Trey Jarmond | twitter – @tjtakes
Formulate a thesis, stick to it until circumstances change, build slowly until the thesis is confirmed, then hit it hard with 15% of it hedged. Always hedge.
Zachary Musso, The Moose Outlook | twitter – @ZMoose12
The most important thing you can do as a trader is psychologically break down your faults and promote your positives from the trading session that was – the next time you see something occur that reminds you of a previous fault or positive, take advantage of it and either take the trade or pass up on it.
Matt Davio, misstrade.wordpress.com | twitter – @misstrade
I would offer two suggestions:
1) more important that picking your next double digit winner is your exepctancy per position sizing and your reward to risk ratio. You can have good results wiped out by one or two big losses.
2) Always go into a trade with a solid plan: entry, target, exit stop. Your plan should come from your diligent research. Do not blindly follow others, even if they claim to be successful.
Leigh Jones, Bulls on WALLstreet | twitter – @copperstl
Understandably, a trader must understand the playing field of the stock market. When you step on the field, be aware, you are in the middle of a game that is highly sophisticated. The market doesn’t care how much you know, how much risk tolerance you have, or whether you are trading with the house payment. Constantly the market changes with the introduction of new technology and intricate software which essentially trade the markets based off logarithms and algorithms. You aren’t trading against simple-minded beings any longer; you are up against the big boys. Do yourself a favor and find a mentor that has traded successfully for over 10 years. This trader has both the hindsight and foresight to provide a competitive edge. Older traders that can’t migrate to the newer methods won’t help you. Newer traders that don’t have the hindsight to place the new methodology into perspective and tweak are just as dangerous. Educate yourself with the newest of methods or it could be difficult to keep up moving forward and remember: there are times when the trade is not your trade. ATAD = Another Trade Another Day
Michael Dawson, MichaelDawson.com | twitter – @TrendRida
Buy high and sell low is a recipe for disaster. Unfortunately, without a systematic approach to minimize your emotions its your destiny.
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