Trading in the stock market can make you very lucrative profits and it can be very risky of you do not have a proper trading plan. Therefore, in order to minimize the trading risk and make you the most earning from the stock market, you have to take the following actions into consideration before you start your stock trading in the real trading world.
1) Trade only in ‘paid for’ positions and avoid margin trading. This is very important because it can make you have a calculated risk of the amount money that you can loss. So, it will not happen that you end up losing a lot of money that you have to pay back for the marginal trading.
2) Only trade stock that have good management experiences and have ‘net asset value’ plus in the sectors that are rising. It is because this kind of stocks has the potential of growing high steadily.
3) Put all your eggs in one basket, then ‘watch the basket’. This means focus on one sector at one time and monitors it. It will make you specialize trading on that particular sector that make you lucrative profit.
4) Diversify exclusively within the sector you are interested in. You will be happier and motivate to study and understand the particular sector that can make your money eventually. So, do not put more than 10% of your available capital into one stock as your goal on your portfolio grows.
5) Do not looking at your stocks too regular. Discipline yourself to ride out the minor ‘ups and downs’, they are part of the game. This important to avoid your emotional being affected by it.
6) Do paper trading first for those beginners until you can make a steady profit from trading the stock market.
7) Set a stop lost for your stock trading by telling the system when to sell out your stock if its price drops to a particular price. This is to minimize your losses.
8) Before you follow the advice of an analyst, check out his or her record. Keep track of their advice, to see how accurate they are. Look at previous newsletters in the archived section for guidance.