How to make better trades
using simple trade management rules
A stock market trading tip for better trades
Trade management rules can affect results of an online stock trading system a lot. But it’s not too complicated to improve your trades in any swing trading system. Therefore, it’s very important to have defined these rules before trading. During active trading hours obey these rules, and use them for trade management during online stock trading. You have to have entry, stop and exit points prepared in advance for any trade based on your online
stock trading system
It’s much easier to prepare a good stock setup during analysis made outside of stock trading hours. During active trading hours follow only these steps:
- Entry
Good
stock trading software
should alert you that stock is near your entry trigger price. Prepare an entry order (for a long or a short trade) and wait for the entry order for this particular stock to be executed.
- Place the stop
Immediately after your entry order is executed, you have to place a protective
stop-loss
order based on your stock trading plan.
- Move the stop
While the trade is in your favor, you must apply some
trailing stop
rules. It’s a good idea to move your stop-loss level if your trade is working well. It helps to decrease financial risk and also emotional stress. What I can recommend is to move your stop-loss level to break even (near your entry point) as soon as your trade reaches the 50% level of the expected profit target.
- Take profit
This issue is not as easy as you think. Trade is open and every P/L profit is virtual until this position is totally closed. If your trade wasn’t stopped by a trailing stop, then it is very good to have some points where you will
take profits.
It’s important to take a profit for most of your trade positions near your target point. Don’t be greedy, and if you see the price is near your profit target (+/- 0.1 or so), monitor it closely. If you see that the price has a problem, take a profit immediately. Do not risk a big correction for only a little more gain.
Return from Better trades by simple trade management back to Stock trading system
|
