Habits that made me a better trader
There are a few ground rules which I follow when it comes to trading.
First and foremost, I follow a system for everything. For my value investing, I do a certain amount of due diligence before starting a position in any stock. I look through articles, financial reports etc. before I decide if it is worth a buy. Similarly, for day-trading or momentum trading, I go in and go out of a trade solely based on technical indicators. When a system is followed, trades are consistent, and you know exactly what you're doing. You aren't just copying someone off Youtube. You aren't just buying because everyone is talking about it.
Second of all, I fight the urge every time I panic. Emotions are your biggest enemy in the stock market. Sometimes, when you followed your system but things go south, it may be tempting to panic-sell. When we're in this state, it's tough to make rational decisions. It is true that in some situations, for example, if a company is suddenly in a lot of trouble and its prospects are drastically affected, it may be a good idea to cut your losses. However, if your stocks are tanking because major indexes are falling, or because of FUD that's not directly related to the prospect of the company itself, then do think again. Distract yourself. Close the app. If you truly believe in the stock, you wouldn't be panicking. Warren Buffett has never tried to time the market. He is systematic and he does not let his emotions cloud his judgment. This is how it should be done.
Lastly, manage your risk well. Money management is important. I allocate a fixed percentage of my money to blue chips and ETFs. $Apple(AAPL.US$ , $Berkshire Hathaway-B(BRK.B.US$ and $SPDR S&P 500 ETF(SPY.US$ are some examples. This is my retirement money. I also allocate a smaller percentage to riskier ventures like day-trading and momentum-trading. Finally, I allocate some percentage to stocks which have considerable risk associated with them, yet I am going to gamble on the long term prospects because I love what I see right now for these companies. These are mainly Chinese EVs like $NIO Inc(NIO.US$ , fintechs like $Futu Holdings Ltd(FUTU.US$ and $SoFi Technologies(SOFI.US$ , to name a few.
Do not be the one guy who puts 90% of his savings into day trading, only to lose half of it in a week. Manage your risk and your money well. While you're at it, know how to put a stop loss or a trailing stop on your positions if necessary. This is especially important for day trading.
First and foremost, I follow a system for everything. For my value investing, I do a certain amount of due diligence before starting a position in any stock. I look through articles, financial reports etc. before I decide if it is worth a buy. Similarly, for day-trading or momentum trading, I go in and go out of a trade solely based on technical indicators. When a system is followed, trades are consistent, and you know exactly what you're doing. You aren't just copying someone off Youtube. You aren't just buying because everyone is talking about it.
Second of all, I fight the urge every time I panic. Emotions are your biggest enemy in the stock market. Sometimes, when you followed your system but things go south, it may be tempting to panic-sell. When we're in this state, it's tough to make rational decisions. It is true that in some situations, for example, if a company is suddenly in a lot of trouble and its prospects are drastically affected, it may be a good idea to cut your losses. However, if your stocks are tanking because major indexes are falling, or because of FUD that's not directly related to the prospect of the company itself, then do think again. Distract yourself. Close the app. If you truly believe in the stock, you wouldn't be panicking. Warren Buffett has never tried to time the market. He is systematic and he does not let his emotions cloud his judgment. This is how it should be done.
Lastly, manage your risk well. Money management is important. I allocate a fixed percentage of my money to blue chips and ETFs. $Apple(AAPL.US$ , $Berkshire Hathaway-B(BRK.B.US$ and $SPDR S&P 500 ETF(SPY.US$ are some examples. This is my retirement money. I also allocate a smaller percentage to riskier ventures like day-trading and momentum-trading. Finally, I allocate some percentage to stocks which have considerable risk associated with them, yet I am going to gamble on the long term prospects because I love what I see right now for these companies. These are mainly Chinese EVs like $NIO Inc(NIO.US$ , fintechs like $Futu Holdings Ltd(FUTU.US$ and $SoFi Technologies(SOFI.US$ , to name a few.
Do not be the one guy who puts 90% of his savings into day trading, only to lose half of it in a week. Manage your risk and your money well. While you're at it, know how to put a stop loss or a trailing stop on your positions if necessary. This is especially important for day trading.
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Ann_Doe : Apple is worth a buy
Dons hobby : This is one of the most informative posts I have seen on here. I am very new to this and I am always looking for GOOD information. I sometimes look at more information than I should and things get conglomerated.
I appreciate finding information that isn't surrounded with more fluff than information.
I pretty much figured a stop loss or something like that would be a very good idea especially for someone that is new to this. My issue is I don't know how to do it lol. I. mostly into crypto, but again I run into the same issue WHEN to sell and when to hold
I have about 1000 XRP and a few hundred in a few different coins trying to get a feel of things before I put any real money in. The XRP is a long hold for me but the the other ones I look at touch lol. I would love to find something that helps new guys better understand the big picture and better be able to use all the tools available not just the ones we know about.
Anyway very nice post like I said very informative but mainly direct to the point. Thanks, have a great day and remember what you do dictates your day which dictates your Outlook which dictates your life as a whole.
Thanks again Don
RichardCrainum80 Ann_Doe: Apple will always be worth a buy
Pochong : These people can talk this way because they have loads of money. Am I, are you? No. Every trade I placed is showhand. It is whatever I cam afford to put to market.
slowly not showy : main plot for stable companies or etf and small plot for higher risk investment. sounds good.
alaricOP Ann_Doe: It is!
alaricOP Dons hobby: Hey! Fear not, I think that moomoo does have a tutorial on setting stop losses which you can go ahead and check out. Some crypto exchanges also allow you to do so!
The stock market and the crypto/NFT space are two very separate entities with different game plans! You could hit me up for either, though I am not necessarily an expert - I'm learning like everyone else here.
Ripple is a decent investment, especially if the lawsuit settles. I hold a small bag myself. I often look through Twitter and Stocktwits to look out for updates. Perhaps you could do that for a start!
For crypto, it's a highly volatile asset with many "phases". The focus now is on Metaverse coins. Then it would rotate into either other alts, or memecoins, or back to BTC and ETH. Some suspect that the end of the bull run is near, some say BTC will have one final push before the correction. We're all speculating at this point. But that's the beauty of the cryptoverse, you never know what's going to happen but you still roll with it
alaricOP slowly not showy: Yep! Risk management is always good.
alaricOP RichardCrainum80: Up to a certain price!
alaricOP Pochong: It is true that you need to have a considerable amount of money in the stock market to implement these strategies, because stocks are expensive, and so are platform fees. You can't really do much in the low thousands. The best way to grow that amount of money is through growth stocks or day-trading, or even crypto, but there's definitely risk associated with that.
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