Ten Stock Tips To Remember

• Don't trade without strict rules and don't trade drunk. Casinos like to supply their “clients” with alcohol because it's proven to bring out a gambling characteristic and cause people to undervalue money. Strict rules are important to prevent you making knee-jerk reactions, even if the rules are as simple as don't trade after a certain time because that's when you've lost a lot of money in the past.

• Keep excellent records of every trade, so you can easily reflect on where you have succeeded and failed. Not only will you be able to analyse if you are winning or losing you should be able to see your reasons for entering and exiting a trade, date, and time so should a similar future trade come up and you can cross-reference it with a previous trade.

• Money management is crucial. You should only risk small part of your account on a single trade so that the risk is diversified across multiple stocks.

• Have a system that is based on rules which each have a reason. You don't want to overfit the system to the market. It's important when testing a system to have separate training data and test data. Never ever design the system to operate well on the test data. Only make it fit the training data well. If it also makes money on the test data then you have a good system. This is important because even random data can end up containing patterns by chance. Just because random contains a pattern doesn't always mean it will keep to that pattern unless the generator of the random data has a flaw.

• Treat it as a business. It's not somewhere you can just put your spare cash and double it like a printing press. It's a business that requires research, testing, and capital. You need to enter it with the right mindset

• Use stop-losses. They're proven to be effective, and if you incorporate them into your system that you design you can analyse what percentage of stoploss is most effective on average.

• It's real money! Brokers love it once you top up your account because it's easier for you to psychologically condition yourself into viewing it as non real money. You'll find it easier to accept risky trades because it's just numbers on a screen.

• Don't overestimate your abilities early on and take on large trades. Lucky streaks will cause you to sometimes perform exceptionally well and it's important to reflect on it and not let your ego become inflated so that when a little bad luck comes your way you lose more money than you ever expected you could.

• Try not to listen to others who made a lot of money very quickly give out tips that don't fit into your system. Because they don't fit your system you won't have a good entry and exit strategy for the tip, and even if it could make someone else money it may well not make you money.

• Don't overtrade your account. Commissions and slippage will eat away at your account with every excessive trade. To avoid overtrading you can hold stock for longer periods of time.

Read this before you make a system that loses you thousands of dollars