9 Trading Rules for Professionals

Author: James Clark

9 Stock Trading Rules Every Professional Should Know

Making a profit on the stock market is much harder than it looks. Nearly 80 percent of newbie traders fail, lose money, or look for alternative hobbies. However, you’ll never hear these statistics from brokers since they’re looking to score new customers. The truth is, becoming a successful trader is difficult and requires a set of rare characteristics. Among these characteristics is discipline. To establish it, you need to a pre-market routine, build strong habits, and follow the essential trading rules for professionals.

9 Stock Trading Rules Every Professional Should Know

The following are 9 essential trading rules for professionals:

1. Follow Your Trading Routine

A stock trader’s typical routine comprises pre-market analysis, major market hours trading, and end of day (EOD) hours. You should never break this trading routine. The best way to do this is by following and trading in only the major markets, i.e., Tokyo, New York, and London. This way, you stick to a consistent setup and timeline.

2. Don’t be Greedy or Emotional

Emotions are your enemy on the trading platform and can highly influence poor decisions. So, be logical and practical by having realistic expectations regarding your trades. Secondly, don’t be looking for ways to make money quickly. Stick to your plan and understand the market carefully before making decisions.

3. Never Fall in Love with a Stock

Falling in love with a particular company or stock will influence bad decisions. No matter how great it is, you must capitalize on inefficiency and make money off it before it’s too late. You don’t want to hold on to a stock for so long and sell at a loss.

4. Don’t Count Your Chickens Too Early

Feeling like a winner early on isn’t necessarily a bad thing, but never celebrate until you close out or cover your position. Experienced traders lock in their trades as early as possible so the others can’t pickpocket their gains at the last moment.

5. Learn to Let Go

Stock trading is among the few professions where losing money every day is part of the job description. Every loss teaches you an important market lesson as long as you accept it, regroup, and come back after learning something. Trading isn’t about winning – It’s about winning more than losing.

6. Avoid Chasing the Market

Stock markets are like shadows. You can never catch them by running after them. Instead, you need to stand still and let them embrace you. Hence, you must patiently wait for the setup and take your time in the market before making decisions.

7. Never Fall for Rumors

To succeed in trading, you need to do proper research and stay connected with the markets at all times. Experienced traders only make decisions supported by strong evidence which comprises the right information from the right source. We’re not saying rumors can’t be true. But what if they’re not and you follow them?

8. Stay Away from Unregistered Brokers

There are hundreds of brokerages online and in your vicinity. Before opting for any one, you must complete a comprehensive background check to ensure the broker is reputable.

9. Don’t Break Your Trading Rules

Trading rules are created to protect you from trouble and help you maintain discipline. If you break them, you’re opening the door for potential losses by this casual approach.

Bottom Line

Most stock traders never reach their full potential simply because they treat trading like any other job. The trading rules in our list are created by professionals for would-be professionals. When looking to succeed in this line, you might want to pick up on a few, and then some.

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