Six Reminders to Successful Trading

During these times when many traders are quick to take profit, fast actions are required and there isn’t much room even for the tiny monster called ‘greed’.

So we take this opportunity to share with you 6 reminders for any traders out there. We don't call it rules or guidelines because human always forget them after sometime. Therefore we came out with the idea of calling them reminders.

Don’t be a pig and get slaughtered
We would like to reiterate the ever famous “Bulls and bears make money but pigs get slaughtered” by Jim Cramer. Basically what he meant was you can make money during any bull as well as profiting from short-selling during a bear market. However, you are borne to be slaughtered if you are way to slow to take profit. What he’s stressing here is that your profit could go flying so you’re advised to take some “off the table” to reduce the risk of losing your “unrealized profit”

Cut loss when things go really wrong
If you’re a long term investor that have studied and done your homework and fully understand your downside risk, you need not this cut loss strategy as your plan is to further buy-in during slumps. Nevertheless, a trader having such mentality would see his bad trade becoming a bad apple that spoils the whole barrel. In this case, the barrel refers to his whole portfolio. Nevertheless, it is advisable not to set a narrow cut loss margin because that may easily be triggered.

Focus on the downside risk
Always assess the whole situation and focus on the downside risk of the position you are about to establish. Worry about your downside risk and let the upside worry itself. When you are fully aware and is satisfied with the level of your downside risk, it helps you to estimate your cut loss margin.

Fully understand the supply demand force
Study the strength of the bull (buyers) and bear (sellers). Adopt suitable technical analysis methods to identify the trend.

Choose to be an opportunist only
Just be an opportunist when trading financial instruments because there’s where you stand a better chance in minimizing your mistakes. You don’t have to be trading just because you have an extra margin or you have just made huge sum of money before that or you have a weekly target to meet. The market always overreacts, so chances are always around to be an opportunist. Let the opportunity come to you rather than chasing it.

Cash is above all
If you’re uncertain, it is always better to stay with cash because it allows you more options in the coming trading sessions. You can never go wrong with liquid cash.