DON'T GET GREEDY:Greed will make you poor! If you experience an overwhelming emotional urge to take a trade because you are sure to make a killing this time, then you are experiencing greed.
Greed and fear drive the markets and for the most part drive the average investor to making mistakes. Sell with good profits, but don't get too greedy. A savvy trader once said, "Pigs get fat, hogs get slaughtered".
BIG SWINGS:
Big moves up are sometimes followed by big moves down and visa versa. Sell on abnormally large moves to the upside and buy on abnormally moves to the down side.
They are generally out of character of the stock and can many times be followed by a "snap back" on the stock. Knowing your stock's trading habits can be very helpful.
HOT STOCKS:
Stocks that are hot move great, but nothing lasts for ever. If you buy a stock for a big, quick gain and find that the stock has "lost its heat," don't allow your money to be dead -- unless you are looking for an investment!
Sell and move on, don't justify your mistakes - it tends to be a costly justification process in the long run. Others in the stock for the hot ride will start to bail out as the stock cools off and looks like it"s not capable of making "hot moves".
JUSTIFICATION IS COSTLY:
Don't hold a losing stock to justify your purchase. If you make an incorrect buy or end up with a stock that is falling when you thought it would climb handle those mistakes quickly.
Do not be tolerant of stocks that are costing you time and money! Get rid of them!
SUDDEN MOVES UP:
Be very careful buying stocks that have just made sudden moves up. Many times they are following very closely with sudden profit taking.
TIME TO BUY:
One of the best times to buy is when a stock is going down on low volume (with no news) as compared to recent increases on higher volume.
This suggests that the selling is lighter and that the holders of the stock that are going to sell have finished selling and the rest are holding.
The sellers of the stocks then may come back into the market when they see the price stabilize. It's also not a bad idea to sell on high volume on the way up, as this usually creates abnormally high prices that cannot be maintained for long.
DAILY VOLUME:
Do not day trade in thinly traded markets, or on stocks that have very low volume. You may find you can't get out of the market as timely as you think.
TRADING TRUISMS ARE LIES:
If it were possible to implement, "Buy low and sell high" or, "Cut your losses and let your profits run" in any meaningful way, then the majority of the people would be making money.
THE SWITCHES:
Your investment method starts losing, so you switch to another, which immediately also starts losing ...
By switching, you open the door to getting the worst results from each method and none of the good and the overall result can be much worse than even the worst system followed faithfully.
THE DIPS:
You can't take advantage of market dips if you are already in the market. It's better to be out of the market more for day trading than in the market.
This will allow you to get in and out with profits fast and be on the sidelines should dips occur. Try to be out of the market more with your trades and in the market more with your investments!
