Stock Market Trading / Investment Rules

The Indian stock market is booming and moving northward – the sensex is dancing in a very sensuous style, and all are happy: the investors in the shares as well as those trading in shares. However, over a period of time, a number of trading rules have evolved. STOCK MARKET TRADING RULES: FIFTY GOLDEN STRATEGY by William F. Eng, a successful investor and trader of equity shares. Each one of the Trading Rules (equally applicable to the investors as well) are a strategic gem. I would just like to share the same with you:

• Divide Your Trading Capital into Ten Equal Risk Segments

• Use a Two-Step Order Process

• Don’t Overtrade

• Never Let a Profit Turn into a Loss

• Trade with the Trend

• If You Don’t Know What’s Going on, Don’t Do Anything

• Tips Don’t Make You Any Money

• Use the Right Orders To Get into the Markets

• Don’t Be Whimsical About Closing out Your Trades

• Withdraw a Portion of Your Profits

• Don’t Buy a Stock Only To Obtain a Dividend

• Don’t Average Your Losses

• Take Big Profits and Small Losses

• Go for the Long Pull as an Outside Speculator

• Sell Short as Often as You Go Long

• Don’t Buy Something Because It Is Low Priced

• Pyramid Correctly, If at All

• Decrease Your Trading After a Series of Successes

• Don’t Formulate New Opinions During Market Hours

• Don’t Follow the Crowd—They Are

• Don’t Watch or Trade Too Many Markets at Once

• Buy the Rumor, Sell the Fact

• Take Windfall Profits When You Get Them

• Keep Charts Current

• Preserve Your Capital

• Nothing New Ever Occurs in the Markets

• Money Cannot Be Made Every Day from the Markets

• Back Your Opinions with Cash When They Are Confirmed by Market Action

• Markets Are Never Wrong, Opinions Often Are

• A Good Trade Is Profitable Right from the Start

• As Long As a Market Is Acting Right, Don’t Rush To Take Profits

• Never Permit Speculative Ventures To Turn into Investments

• Don’t Try To Predetermine Your Profits

• Never Buy a Stock Because It Has a Big Decline from Its Previous High, nor Sell a Stock Because It Is High Priced

• Become a Buyer As Soon As a Stock Makes New Highs After a Normal Reaction

• The Human Side of Every Person Is the Greatest Enemy to Successful Trading

• Ban Wishful Thinking in the Markets

• Big Movements Take Time to Develop

• Don’t Be Too Curious About Because Behind the Moves

• Look for Reasonable Profits

• If You Can’t Make Money Trading the Leading Issues, You Aren’t Going To Make It Trading the Overall Markets

• Leaders of Today May Not Be the Leaders of Tomorrow

• Trade the Active Stocks and Futures

• Avoid Discretionary Accounts and Partnership Trading Accounts

• Bear Markets Have No Supports and Bull Markets Have No Resistance

• The Smarter You Are, the Longer It Takes

• It Is Harder To Get out of a Trade Than To Get into One

• Don’t Talk About What You’re Doing in the Markets

• When Time Is up, Markets Must Reverse

• Control What You Can, Manage What You Cannot
  

During next few weeks, a little detailed analysis of each of the above rules shall be posted.