PATIENCE:Wait for all the stars to line up! Good things come to those who wait, be it low buy prices or high sell prices. Sometimes if you had only waited, you could have sold higher or bought lower.
Have patience! It's without a doubt one of the golden keys to making money in the stock market. The patient trader has self-control and waits for his indicators to tell him when to enter or exit. Even if the market "appears" to have ended its rally, if it does not meet certain criteria the trader had previously set for himself, he must wait.
REVERSE PSYCHOLOGY:
If patience is the golden key to trading, then the silver key is doing things opposite from the rest of the market! You want to buy when the average investor is selling and driving the price down. And when good news is driving a stocks price higher, you want to sell your shares at the over inflated price.
Buying when stocks are falling and selling when they are moving into higher ground is one of the hardest things to learn to do when you first start trading. We don't have the luxury of holding our stocks for years to help iron out the little highs and lows. We live off the little highs and lows! Buy when there is blood in the streets!
EMOTIONS:
The stock market is very good at playing on your emotions. In order to be a good trader, you must look at the market in a cold, hard way. When the masses are selling in a panic, you must stand fast or step up and buy.
Remember that the market is made up of emotional herds buying and selling in waves. You must be the cold, cunning and calculating wolf looking over the herd for your kill. Don't panic sell and don't buy on hysteria.
MARKET ORDERS:
Don't use them unless you have to. Don't ever place a market order for a stock at the opening of the market, or when a stock is making new ground fast.
Putting in a market order in the first 15 minutes of the market is a sure way of paying the highest possible price for your stock, because as all the built up orders from the previous day go through, it lifts the stock prices for a few minutes. You can be pretty sure that your order will go off at the high of the day this way. (but keep in mind it's sometimes handy to sell during this time).
STOP LOSSES:
These are almost as bad as market orders. Stop losses are a sure way of selling at a loss.
You can only use them when you are "in the money" and would normally sell your stock, but want to retain a slight possibility that it might continue to go higher.
BUYING LOW:
Sometimes the best way to buy low is to put in an order for a stock at "a price you'd love to own the stock at." Let's assume for a moment that the stock you want is trading at 100, try putting in an order at 95 and wait it out, what do you have to lose?
You never know when you might hit the low for the day that way. It's far better than putting your order at 99, only to find it crashed past that, filled your order and continued down to 95. You'd be surprised what an effective way this can be to both buy and sell. When you get your "dream" price, it's a great feeling.
SELLING:
Selling is actually harder than buying in many ways. Try to decide what price you want to sell your stock at as soon as you buy it, so when that price does come along, you'll be ready to move.
FREE LUNCH:
If there is a free lunch in day trading, it's picking stocks that are making new medium trend highs to trade with. That way if you do get in at the wrong point, there's a much better chance that your high buy will turn into the next low buy as the stock moves higher in its overall trend.
This is one of the only safety nets you have in day trading, when combined with patience and some extra cash reserves.
IF YOU ARE WRONG:
Then you are wrong! Don't try to justify a bad trade by convincing yourself it will turn into a good trade.
If you buy on the high side, then sell at break even and buy back in on the low side. Talking yourself into believing that your mistakes are actually wise moves in disguise is very costly. Be professional enough to spot your mistakes and move on.
PROFITS AREN'T AS IMPORTANT AS YOUR CAPITAL:
If you miss out on some profits, that's okay, you can always find another stock to buy.
However, if you lose a big chunk of your trading money then the game is over. Protecting your trading capital is your number one mission, followed, of course by increasing it.
