If you can not follow a rule, do not begin speculating or investing, as you are sure to lose. Learn to adhere strictly to a rule or do not follow it at all.

The following rules should be carefully studied and applied in your trading:

Capital Required

You would not try to run an automobile and start out to travel several hundred miles unless you knew how much gasoline it required to run a given number of miles. Yet, you go into speculation without knowing one of the most important things, the amount of capital required to succeed and make speculation a business. Do not try to get rich in a few months or a year. A man certainly should be satisfied if he can acquire a competent fortune over a period of ten to twenty years. Often we have one year when a man with nerve and knowledge and a small amount of capital can make a fortune. I have been able to pile up enormous profits in a short time by pyramiding, but this can not be done continuously and I do not claim to be able to do it.

What I am trying to teach you is a safe, sure way, which will yield more profits than any other business on earth if you will only be conservative and not make speculation a wild gamble. A man may go into business and lose all of his money and then years pass before he has another opportunity to make a large amount of money in that or any other business. Yet, in the speculative markets opportunities return every year, provided a man has studied enough to see them when they appear. The chances for gain are so unusual and so many great opportunities do come in Wall Street that the average man gets greedy, gambles and does not wait between times for the real opportunity.Limit Your Risk

A strong will power is just as essential as plenty of capital. If you have not the firmness, will power, and determination to protect every trade with a stop loss order, do not start stock trading, for you will fail. I have often heard traders say “If I place a stop loss order at a certain point the market is sure to catch it.” Yet they realize afterward that the stop loss order being caught was the best thing that could happen to them.

There is nothing better than getting out quickly when you are wrong. The man who refuses to get out when he is wrong usually stays until his money is gone and the margin clerk sells him out. A lot of people do not know how to place a stop loss order on a trade when they make it. A stop loss order is an order given to the broker that becomes a market order when the stock reaches the price at which it is placed.

Here is my single best advice I can give someone who wants to improve their stock trading skills for bigger profits. Of course, there could be hundred more tips but first things first. You can not be profitable and successful by ignoring the first step.My advice is: Know yourself. I strongly believe that this is the most important advice ever for a stock trader. Unfortunately it needs some experience and a lot of discipline to make this advice work. And nine out of ten people fail. So what does it mean? Online stock trading is like any other business, hard work. It is 90% blood, sweat and tears and just 10% about picking the right stock or following a system.Everyone is different. I talk about the way you react to certain situations. Most people are simply not made for trading stocks. They do exactly the opposite of what they should do just because they loose control over their emotions. They are mentally instable. They should have known themselves better. They loose because they are a loser. Period.That is why just a few traders ever make a fortune in the stock market. That is why most people loose money to them. It is like in the real life. Most people are a looser and do not reach anything in their life. This is no offending, just plain words and reality. If you want to compete in the stock market then you must be able to face the truth without emotion.We all have dreams about what we want to achieve, about who we want to be. Most of us believe that we are somebody. But the truth is that just a very small percentage of us has the guts, discipline and the total commitment to follow through to the end. Very few people have what is required to actually achieve the ultimate goal.The stock market is something special. There are just two ways you can go. You either win or loose. If you win, then you can only win big. If you loose, then you loose everything. There is no thing in the middle.Imagine you have to trade for a full year every single day. At the end of the year you either made it (big time) or lost it all. You see, there is no room for whining and hoping. There it is. Take it or leave it. Therefore you must go for the ultimate goal. It requires everything.Most people are never a winner in anything in their life. They are happy to get around and make ends meet. That is great. Nothing bad about that. But if you talk about being a successful stock trader, talking about big money in the stock market then your are talking about climbing up a mountain big like the Mount Everest. Are you strong enough for that?

In the stock market it’s not impossible to watch a stock rise up more than 100% in less than one hour on a good momentum day. And even when you can see traders that make $5000 on a single trade, it is also not unusual to watch beginner day traders lose their shirts because of a series of unwise decisions

The problem is that if you don’t know what stocks to look for and how to properly approach them you could end up wasting cash instead of making your profits grow. You can’t just trade stocks like if you where gambling on a casino.

That’s why the most important aspect of stock trading is the knowledge FILTER you employ to make your buy and sell decisions.

There are many “fantastic” stock systems outhere, but you need to test them in order to discover which ones help you the most. That’s part of your homework as a stock trader. Test, test and test again.

Bogus stock trading software programs and complicated day trading systems that rely on a “boat load” of technical analysis indicators can confuse you and make you slow, and being slow when day trading stocks can be as dangerous as not knowing what to do in the first place.

The worst thing that can happen to a beginner stock trader is to get information overload. It’s better to go step by step, and test a practical stock trading strategy that can show you how to focus on simple ways to make money while picking SOLID hot stock trading opportunities once at a time.

In the end, stock trading is all about buying and selling according to your especific knowledge FILTER. Once you master and follow your proven filter parameters like a clock, you can expect to start making serious amounts of cash on a consistent basis.

The Right prediction is the stepping-stone for any stock trading enthusiast-it makes or breaks a stock trader. However, you have many tested options to gather the required predictions.

If you are a long- term investor in stock trading, then it is advisable that you seek predictions from the experts. You can find prediction experts on the Internet, television, making predictions of the stock market for different span of time ranging from a week to a year. On the other hand, the general trend for short-term investors is to engage in other prediction tools that cater to their personal needs in stock trading.

Predictions for stock trading can be categorized into four generalized areas namely Technical Analysis, Fundamental Analysis, Software training and momentum.

*Technical Analysis-this area uses charts and trends as tools. This method predicts the price of a stock by determining the levels of resistance and support. The chart usually contains high points, low points, special formulas, and calculations relating to previous lows, highs, and volumes. In this system, directors, news, dividends of a particular company are not considered as indicators. It is facts and figures that count.

*Fundamental Analysis-under this system the entire aspect of the company in question, is taken into careful consideration. Data relating to the company including shareholders, directors, services, products, and news are analyzed. This system allows predictions on the movement of stock for a given time frame.

*Technology-this system usually makes use of trading software. Depending on the type of software, both technical and fundamental analysis can be performed. The software performs a data analysis using data pertaining to previous prices, trends, and movements to predict the future price of a particular stock.

*Momentum-regulars in stock trade usually use this method. The system involves analysis of two lists of buying and selling orders during the same hours of the stock market. The movement of a particular stock is determined by analyzing the buying and selling orders, volume, and price. This method involves rapid actions to accommodate the sudden changes that usually occur in stock prices.

Predictions can be made in regards to how the stock market will go at a given time and facilitate the trading of stocks in these ways. If predictions are done correctly, they can take you in the right direction. However, you have to remember that these are not foolproof indicators.

Summary:

For a stock trading enthusiast his best bet is predictions. Predictions, if right, can make a successful stock trader. There are four methods of predictions namely technical analysis, fundamental analysis, technology, and momentum. This article gives a brief insight into these four areas that are key to successful stock trading.

Anyone can loose money in the stock world. It makes no difference whether you are an amateur or a veteran. Stock gurus will tell you that losses occur owing to lack of knowledge of certain fundamentals of stock trading, poor discipline, and wrong decisions.

Though trading is trader specific, there are a few generalized rules that apply to all traders. If you are losing money in stock trading, you should look back and see whether you are indulging in any of the five major blunders while trading in stocks.

*Trading against a trend- this is considered as the most common mistake in stock trading. Experts recommend that you should never wait for a stock to hit an absolute low or high. Rather you should seek out established trends that will guide you in the right direction. Going against a trend means sure doom in stock trading.

Using a tool that allows you to chart stock movements can identify trends. It is also essential to learn and understand different techniques adopted to know specific price trends. This will equip you with the necessary means to avoid being a trader that trades against the trend.

*Failure to stick to the stop loss limit- In order to avoid huge losses you should determine a stop loss point and stick to it religiously. This rule applies for both full time and part time investors.

A stop loss point is a point beyond which you are not willing to take chances. Once this point of loss is reached, you should withdraw. However, this system only works if you adhere to the limit you have set for yourself.

*Taking high risks to regain losses- this is one of the most common mistakes in stock trading. Some investors make the mistake of taking greater risks that they hope will help them recover from a previous loss. This only results in the rapid erosion of the investor’s capital.

As an investor, you should understand that emotions should not be mixed with trading. You can never take revenge on the stock market. It is better that you learn from your mistakes and try to convert losses into experiences that help you become a more matured and successful trader.

*Failure to have objectives- not knowing your objectives as a stock trader could be hazardous to your entire financial structure. It is always advisable that you set targets, which you hope to achieve from financial gains from trading in stocks.

You have to work hard to achieve these targets but the targets have to be such that they keep you focused and open to learning.

Targets could be anything ranging from higher education for your children to purchasing a property. Short-term targets in stock trading will not help you remain focused and hence should be avoided.

Summary:

You have to be aware of certain fundamentals of stock trading in order to prevent losses. This article deals with five major blunders that are often made in stock trading.