Stock trading is a very complicated business. Without having a clear knowledge of the stock market, no one can change their life. In most cases, rookies in Hong Kong start trading with penny stocks.
Due to the volatile nature of the penny stock, some make an insane profit and start thinking they know everything about this stock market.
Elite traders at Saxo never prefer to trade the stock that trades below $5 per share. They are focused on a stable stock as it allows them to make more profit. The popular stock prices are much more stable and can offer you a decent profit-taking opportunity.
Let’s discuss the top 4 rules you must follow as a stock trader. If you can follow these rules, you can expect to trade stock like the pro trader.
1. Trade a stable market
Being a stock trader, you should only trade a stable market. If the price movement is extremely volatile, you should trade that stock. By trading the extreme stock prices, you are imposing a great risk to your trading career. Try to analyze the most popular stock as it will give you more profit-taking opportunities.
Though it is really hard to make a big profit at stock trading. But once you learn to trade stable stock, you can make a consistent profit. At times, you have to lose money while trading stock. Consider those losses as your business cost.
Trading the stock market is more like finding the needle in the hay. You have to create a unique trading method by which you can analyze the price movement and find some good trades. Without following a strategic approach, you are not going to make a profit regularly.
2. Trade with the trend
Being a stock trader, you might not understand the importance of the trend trading method. But if you read more about the professional approach in trading, you won’t be trading the market against the trend. Trading against the major trend is one of the key reasons to lose money.
Though you might be able to filter out the key reversal zone, still you should not try to sell the top and buy the bottom. Trying to beat the market is a bad idea. If you make a small mistake, you might hurt yourself very badly.
3. Trade in the higher time frame
To trade the major stock like a pro, you have to analyze the data in a higher time frame. A higher time frame trading method is always profitable as it allows traders to make a decent profit even in highly volatile markets.
Though the higher time frame trader has to wait for a long time to get one good trade, it is the only way by which you can limit the risk. If you intend to trade the lower time frame, learn to deal with the multiple time frame analysis.
By studying the different time frame data, you will be able to filter out the bad trades. Once you become good at multiple time frame analysis, you can trade stock like a day trader. But remember, trading the lower time frame is very risky and you might lose more than you anticipate.
4. Trade with discipline
The pro traders never break discipline. Let’s say, you have lost 10 trades in a row. Do you think you should increase the risk and try to recover the loss? If you do so, you are not acting like a pro trader.
Pro traders focus on the risk factor and they are well prepared about the market dynamics. Due to their strong risk management skills, they can overcome the losses.
Things are not as hard as they seem but once you learn to trade with managed risk, you will succeed like the pro traders.
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