I want to share 7 key tips on how to trade better and how to take your trading to the next level to make you think a little differently.
Have an Open Mind
Have an open mind when you’re trading. There isn’t just one way to make money in the stock market. Many people think you just buy low and sell high. This is the technical mentality, but that’s the speculative version of trading. Understand there’s more than that. You can sell things short (meaning you sell high and buy it back low), but of course this is a more intermediate concept…
There’s also forex, commodities, and options. With options you can trade so many ways: option spreads from iron condors, to butterflies, to calendar spreads which are some of the things I like to do with my own retirement account.
You have to find the way to make money in the market, look at different strategies, and have an open mind. You can’t think one way or one direction, or you could get burned. Most people think, “This is my only way to trade and this is how I will trade. This is how I learned 10 years ago and that’s what I’m going to do from now on.”
If it works for you and you’re making consistent money, that’s great. But you’re going to have to learn and understand there’s not just one way to make money in the stock market. If you’re frozen at a certain level not making a consistent income, then you’re not doing something right.
There’s more than one way to skin a cat. There’s more than one way to make money in the stock market. Look at all the different ways and see which fits your risk and reward strategy. See what fits your risk profile. See what fits you, and then make the decision and create a system around that.
Stay Away from the News and Media
Remember that the news and media are all about hype. They are there to give insight and information and show you what’s moving and what’s going on in the market and economy. However, remember that some people’s agenda is to persuade you to buy into what they’re saying…
For example: if they upgrade the stock, they want you to purchase that stock so they can sell back into you and vice versa. If they downgrade the stock, they want you to sell the stock so they can buy into the stock in hopes of it running higher.
This isn’t the case for everybody, but this is typically what happens. A lot times, the news and media on stock-trading is for entertainment purposes. Sometimes it’s great to get alerts here and there, but it isn’t the best methodology in order to be consistent. It’s not you doing the homework.
How do you know when the other person is going to come on TV again? How do you know when the other person is going to upgrade or downgrade the stock? You really have to be focused on these specific people each and every time.
Stay away from news and media. It’s great for entertainment purposes, but it’s not what you want to trade consistently.
Master the Art of Trading First, then Go Bigger
Learn to trade first and manage your risk. Manage your money first before increasing your share size.
Many beginners try to trade 20 shares, 50 shares, 200 shares, or 2000 shares. They jump the gun before they really get there.
If you have a system and strategy in place to be able to do long-term investing, you might have to do things differently because you’re in it for the long haul. If you’re trading on a time zone or time level of holding your share or option contracts for a few months or a year, you’re going to have to try one or two years to see how things play out…
See if you’re consistent before upping your share amount for the company. Stick to 3-5 shares to see if your system is actually working. Test it out. Put your emotions to the test and see how well you do.