Stock Tading Profits 101

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Wednesday, October 29th, 2008 Subscribe To Our Feed

When I first got into Stock Trading I made over 70% on my account. It was so simple. I simply couldn't believe making so much money could be so easy. I started dreaming about managing billions and taking over the world with your trading system. Doesn’t everyone?

Then the markets turned (as they ALWAYS DO) and I gave back about 40% of my profits. Still not bad. I was up over 40% as a complete novice.

But how did I do this? Well, I was simply doing the right things at the right times without even knowing it.

What are the “right things”?

1) It was a bull market. It was one of those glouries bull market cycles we had so many of in the 90’s. 80% of stocks were flying up in great trends. Money was flooding into stocks. This was a great time to be in the stock market. I was lucky on the timing no doubt about it.

2) I was investing/ trading in the leading momentum stocks and sectors. Software, internet, high tech sounded “sexy” to me so I only bought stocks in these sectors. I was looking for huge spike in volume (buying) and following them.

3) I was going with the leading stocks. If it was going up I as jumping in. No analysis. no price anaysis looked at. No overthinking. I was jumping into the leading stocks.

4) If I was wrong I would cut my losses. If I was right I rode it up as far as it would go. I didn’t get fearful with profits. I didn’t want my losers to “turnaround” (not that they ever do). Stop searching for advice and opinions that backed up my hopes. I was like a robot. I never let losers become large and I let my winners grow.

And that is about it. You want to make money in stocks just do the basic things right:

1) Find the major trend of the markets and go with it. Bull market go long the leaders. Bear markets stay in cash or short stocks.

2) Always practice good money management. Do not put all your eggs in one basked but also do not diversify too much. Cut your losses, Let the winners ride. Take low risk trades and follow your rules.

When the cycle is right and you are aliment with it. Making money in stocks is dead easy. There’s nothing easier to do. BUT get it wrong. Get the cycle wrong and try to fight it and you find it very easy to lose money. It’s your choice.

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