Very often I go over different ways people can trade Stocks. While trading strategies that fit your “Trading Personality” are detrimental to your success when it comes to trading, there’s another key element I’m always preaching about…
When you trade stocks, you literally need to be a cold blooded killer on the hunt. You can have no emotion (Even When You Win), because emotions clouds your judgment.
I know I say this all the time, but maybe some of you would appreciate a more in-depth explanation of what I’m talking about, along with some examples.
Today, I’m going to so just that for you.
Keep reading below, go over the information, and hopefully it will help you understand how to keep your emotions out of the Markets, and help you become and better, more profitable trader.
By taking the emotion out of investing, your odds of profiting are far greater, while your chances of making impulse or irrational decisions are significantly reduced.
An Interesting Thing…
There is an interesting thing about greed, and you may have seen it yourself a few times. Greed has no top. Greed has no point of satisfaction. That’s why there are horror stories about investors sitting on 1000% gains, only to continue to hold on as profit takers begin sending the price back to earth.
However, if that same investor had been asked what type of gains he or she would like to see from the stock BEFORE they actually invested, they would almost certainly come up with a number far less than 1000%. This leads us into our next point, and why it is so important.
Aim Before You Shoot! When you first buy a stock, set realistic and specific targets of when you will sell. Whether it is after an increase of 40% or 200%, you should know them and stick to them.
It is OK to set a target sell point at 40%, then increase this if the stock starts rocketing toward 100% gains. But don’t use the stock’s move as an excuse to throw your original targets away and hold out for 200% and 300% profits.
Adjust Your Aim Having said that, make sure to factor new press releases, financial statements, and market conditions into your target sell prices, more often than not, when Trading Penny Stocks, the market conditions can be the largest factor. It is OK to adjust them higher if the market suddenly gets hot, as long as you are also willing to set them lower if the markets begin to run into a downdraft.
For example, a strong earnings report may mean that you would be willing to sell at a level 20% higher than you had originally believed would make you confident with your trade, rather than thinking ‘now I can really rake it in,’ or ‘I could probably get…’
In other words, the bottom line must always be to focus on achieving gains that you are happy with, and that are in line with your original expectations for the shares. Act on expectations, not hopes.
Sure-Fire Solutions and Tips You may benefit from using stop loss orders, a stop loss simply says to keep the shares if they continue to climb, but sell if they sink to your strike price. This method can enable a trader to limit their risks, but still enable them to capitalize on any upward price movement.
A good example about in relation to this article is our Trading Idea from December 13th, 2010, which was AMPW.
AMPW has continuously gone up everyday since our alert when it opened on the 13th at .93.
AMPW closed yesterday at 1.45, which is a total potential gain for my subscribers of +55.9% in a little over a week.
When it comes to showing our subscribers winning Trading Ideas, the ChartPoppers Newsletter stands on it’s own.
We’ve shown more winning Trading Ideas in 2010 than any other newsletter out there, and we’re looking forward to an even stronger, and more profitable 2011.