Helpful Information, Articles, Tips and Tricks
for Day Traders.

10 Rules for Traders

1. Invest with the trend. You’ll improve your odds of success by buying into upward momentum.
2. Buy cheap companies when the stock price is in an emerging uptrend. Buying value stocks is good, but only do so when the stock price is in an upward trend. If you pick the right stock, this can result in big long term gains.
3. Never swim against the tide. Never buy into a downtrend. Cheap stocks can get much cheaper. Wait for the downward trend to finish and for an uptrend to emerge before buying.
4. The value equation: Low PE + high ROE. When assessing valuation fundamentals this is one of the traits to look for. That is, stocks trading on a low price-to-earnings ratio and a high return on equity. This combination usually suggests there is good value in a stock.
5. Cheap stocks can get much cheaper, expensive stocks can get much more expensive. In other words, trends can persist much longer than you think possible.
6. Listen to what the market is ‘saying’. Stock charts tell you a lot about how investors are thinking. Don’t ignore the story in the charts.
7. Fundamental and charting analysis should confirm each other’s view. The charts should confirm a stock’s fundamental story. When these two viewpoints don’t match, be wary.
8. The market is smarter than you. This is why it’s important to cross check the fundamental story with the charts. If the charts say you’re wrong, take notice.
9. Be financially, not emotionally, invested. Be prepared to accept you’re wrong. Don’t fight the market and hang onto your bias…the market will always win. Don’t invest your emotions in a position. It will make it that much harder to get out when you need to.
10. Have an exit strategy. Know at what point you’re willing to cut your losses if you’re wrong. Don’t hang around thinking a stock might bounce back.