Things You'll Need:
- Separate bank account for trading and investing
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Step 1
Minimize your losses. When you begin to see your trade plummeting, pull out. Do not sit in front of your computer wishing for the trade to go back up. You'll only lose more money.
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Step 2
Set up a stop-loss. A stop loss is a common feature on many trading platforms. They're all the same. You don't need a specific software for setting a stop-loss. No software interface gives you a great edge over any other software. When a stock hits a predetermined drop, your stop-loss feature will trigger a sale. This protects you from losing more money than you can afford to lose. Don't lose everything you own on one stock.
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Step 3
Buy low and sell high, even small smounts. When a stock moves a little, you should buy. Don't wait to buy as it starts to sky rocket. If a stock shoots up, it is too late to buy. So move on to the next investment.
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Step 4
Keep your gains. You should have a minimum amount of money in your bank for trading any stocks or currencies. Keep that amount fixed. If you lose, carefully set aside some money from your day job to replenish the account. Don't put your hard won earnings back into your trading account.
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Step 5
Control your emotions. Losing money is part of trading. Do not expect to win all the time. Rather, expect that you will lose money most of the time. Do not be afraid to lose money. If you take no risk, you will take no gain.
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Step 6
Hold a trade until you start to see the charts indicating that the trade is changing direction. At this point, if you have earned a few thousand dollars, it is easy to start thinking that you want more money. If the signs indicate that the market is taking a different direction, take your earnings and close.
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Step 7
Watch support and resistance levels on any stock. The resistance is the point when the stock cannot go any higher. On the downside, stock shouldn't trade below the support. However, when a stock price does the contrary, you need to watch the stock carefully. Huge profits can be made if a stock skyrockets above the level of resistance. But be careful. Stock value can dive deeply when there is a breach of the support level.
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Step 8
Follow the momentum of the market. When a stock plummets, don't assume that it will bounce back up. This is where the gambling man runs in to trouble. Stocks that get nailed to rock bottom are probably on their way out. It is unlikely that the stock will rise up.
