Money Article Library LOGO spacer.gif - 1kb

Home | Stock Trading


Five More New Trader Pitfalls You Can Avoid

By: John Forman

Trading can be rewarding. You can make lots of money. You can have tons of fun. You can have something to brag about to your friends. Unfortunately, trading can also just as easily lead to financial distress and high blood pressure if you don't go about it the right way. Here are a five more things you can do as a fledgling trader to get off on the right foot.

#1 Have a System!

You will not be a successful trader if you do not have a system. They come in all different shapes and styles, but there are a couple of common elements. A system has both entry and exit determinants. A system can also be described. If you cannot verbalize your system, it's not a system. If you don't have rules for both entry and exit, it is not a system.

#2 Take the Time to Learn!

Many, many dollars can be saved by new traders if they take the time to learn and practice. There are so many resources so readily available today that there is no excuse for not entering the markets prepared to do battle. Demo accounts can be found for all major markets. That means you can practice your order execution, and you can paper trade your system to confirm its viability before putting a single dollar at risk. To do otherwise is foolish.

#3 Trade in the Right Time Frame!

You have a life beyond trading. May be you have a job or go to school. You have family and social commitments. All of these things combine to determine the timeframe you can use. It does not make sense, for example, to try day trading when you cannot not monitor the markets almost continuously. In my own trading, there are times when I can day trade or swing trade (1-3 day position durations), but there are others when I know I won't be able to dedicate as much time to the markets and therefore have to take longer-term positions. You must find a trading time frame that fits your lifestyle.

#4 Trade the Right Market(s)!

What often happens with new traders is that they get in to trading because of some experience they had which introduced them to the thrill of the game. That experience probably also got them in to a certain specific market, like stocks or foreign exchange. An emotional attachment is established. Needless to say, this isn't the best way to pick the market you should be trading. The various markets have different trading profiles. Some are more volatile than others. Some are good for trading intraday, while others are better for longer-term action. The process of deciding to begin trading should include a hard look at what market you should trade based on your account size, trading time frame, and
risk tolerance.

#5 Understand the Risks!

Every market has different risk factors. In fact, each trade has its own distinct risk factors. You need to be aware of them. You may have a general awareness that the market may not go the way you thought. That is certainly true, and that is why stop loss orders are advocated. It is how the market can go against you, though, that is important. In the major markets, things like economic releases, earnings reports, and statements by government officials can influence prices. Some cannot be avoided, like a natural disaster, but others can be by simply being aware of the calendar and taking measures to guard against an adverse data release or speech by someone like the Fed Chairman.

As a new trader, you will make mistakes. If you take the advice of this article and it's predecessor, "Five New Trader Pitfalls", you can avoid some of the bigger potential pitfalls. That could both save your money in avoidable losses, and potentially lead to more profits.

Article Source: http://www.moneyarticlelibrary.com

John Forman is author of The Essentials of Trading (www.TheEssentialsofTrading.com) and a near 20-year veteran of the markets. For a free e-book on getting started in trading go to www.theessentialsoftrading.com/FreeGuide-GSIT.html




RECRUIT & TRAIN MLM WINNERS FAST AND EASY... CLICK HERE NOW!


Please Rate this Article

 

Not yet Rated

Click the XML Icon Above to Receive STOCK TRADING Articles Via RSS!


Related Articles:
SUPERCHARGE YOUR BODY AND YOUR BANK ACCOUNT WITH A.C.T. --FREE SAMPLES!

Click here for Cash Making Power Sites



Public Disclaimer For All Users :

All articles in this directory are the sole property and opinion of the author. Author's assume all responsibility for any claims, or opinions, voiced in their articles. No article in this directory is intended to provide any legal or professional investment advise. Articles are written for entertainment and educational purposes only. Readers should, in all cases, consult a licensed professional before taking any actions with regard to money management, investments, business opportunities, etc.

This directory, it's web site developers, internet providers, web hosts, and designers accept no responsibility for any information in this directory. By submitting to this article directory, all author's agree to "defend and hold harmless" all individuals and companies associated with this director, in any claim or cause-of-action brought to any court of any jurisdiction, against them as a result of publishing and archiving the author's articles and information.



Powered by Article Dashboard