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Key to sucess stock market

 

Sure, your first trade can be winner, but to consistently make money in share market u have to learn how to lose. More to point, you have to learn how to cut your losses.

The majority of people who dabble in share market see themselves as smart, educated and sharp. Self-belief is great. The most successful people in world have strong belief in themselves. Some of most unsuccessful people in world also have strong belief in themselves. So what's difference Bet. successful and unsuccessful?

One major difference Bet. successful traders and unsuccessful traders is ability to admit when one is wrong. A successful trader will cut their losses before they get out of hand. An unsuccessful trader will let their losses grow in false belief [hopes] that things will pick up.

It would be nice if every share pick was winner, but when u get odd loser u better make sure u cut that baby lose before u lose some big dollars.

The Stop-Loss

Before u even consider entering trade, u should determine your stop-loss point. Your stop-loss point should be set at price that you're willing to sell your share at should things turn bad. The price you pick will vary depending on your financial position and particular share being considered.

You can want to set stop-loss exactly 8% under your purchase price, or you can want to set it just below some clear resistance in chart [if the share falls below resistance level, u can be fairly sure things will continue South for whiles]. The most Imp. thing is to test your system. If u set your stop-loss too close, you'll never be in game when share turns good. If u set your stop-loss too far away, you'll end up losing too much money.

Remember, main aim is to make profit across your entire portfolio. Imagine u owned $IOOO worth of 5 different share. You set stop loss at IO% current market value; so if value of single share drops to $9OO you'll sell at that price. Even if u are wrong with 3 of 5 picks [a $3OO loss], u only need to make I5% on remaining 2 shares to break even. What if those remaining 2 shares made 5O% [which is very realistic if u pick your entry rights].. You'd actually profit $7OO across your entire portfolio despite fact 6O% of what u picked were duds!


Starting with 5 positions worth $IOOO each: $5OOO
3 losing shares lose IO% each: -$3OO
2 winning shares make 5O% each: +$IOOO
Total = $57OO

Modern trading systems have completely automated stop-loss systems. This makes it so easy to set stop-losses that u have no excuses for losing big in single trade anymore! In fact, you're mad if u don't take advantage of stop-losses. The only trick is setting them wisely. You'll learn how to plan and time your entry and exit points on this site over the next few months.

 


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