Stock Market Trading Tactics & Tips to Remember
Are you looking to make money trading stocks?
Updated January 29, 2009
Trading stocks for profit is arguably one of the most stressful occupations on the planet, but it can also be one of the most rewarding monetarily. Here are some trading tips for beginning traders to help you avoid making common mistakes in the market and to start making money day trading.
The following is a list of stock market trading tips:
- Always cut your losses at a predetermined price/ area.
- Don’t be fooled by the headlines.
- Make sure you have the correct symbol, price, buy or sell info correct when entering an order (typos can lose you money).
- IPO’s are unpredictable to trade and should be avoided in most cases.
- Never chase a stock intra day after a huge run up. Stocks often trade back down.
- Avoid buying and holding overnight, just before the earnings report of a company is to be released.
- After selling a stock for a gain intra-day, avoid buying the stock back at a higher price if it continues to trade up, especially minutes after the sale. (This is the fear then greed syndrome)
- Around 11:00 AM avoid putting on buy orders, around 12 o’clock stocks seem to like to trade down at this time. (the lunch time effect)
- Around 1:50 PM is a good time to start putting on buy orders, the 2 o’clock time area seems to have the highest percentage during the trading day that stocks will move up.
- Before you enter into a stock, determine if it is an intra-day trade, 1-2 day trade, swing trade of 3 to 10 days, or longer-term play. If you enter a stock as a day trade make sure that it does not become a long-term play.
- When there is an unusual circumstance that happens in the market and you sense uncertainty (fear), lighten your holdings. Fear almost always leads to a down market.
- The 3 months of the year that you need to pay special attention to are March, June, and September. These three months are the most common months when companies warn about earnings. This is one reason why June and September are typically down months for the stock market. When trading during these months avoid holding overnight, and trade fewer shares than you typically would.
- Second week of June expect warnings. Make that all of June!
- In a listless/ trendless market, buy on dips and sell rallies.
- When buying options, avoid buying them after a volatile movement in the stock.The volatile movement will cause the implied volatility to rise and will make the option more expensive. If you own an option after a quick jump in your direction, you may be better off taking your profit then, because the time depreciation can really cut into your gains.