Stock Investing and Trading System
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Top Stock Picks
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Top Stock Picks Portfolio Comments2008-08-25: Top Stock Picks candidate **** was purchased for the GSA Portfolio. Current Stock Portfolio Positions: IG** (+5%), DG** (+1%), DX** (-0%), MA** (-1%), GX** (-5%), II** (-9%), MR** (-12%), CM** (-17%), |
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Our Stock Trading Rules Also See Our Recommended Stock Trading Books
- Every trader must have a profit and loss plan - a blueprint, if you will. Without a plan, you will lack the discipline to control your emotions, which is your biggest enemy.
- Always determine up-front the maximum loss you can take on any trade. Losses should be limited to 7% to 10% maximum. This is one of the most difficult rules to follow and requires tremendous discipline.
- 3 out of 4 of your stocks must be sold if they show a profit of 25-30%. Sometimes, an outstanding winner comes along, and it is time to be a pig. You need to milk these winners to the max, as explained below.
- Do not take profits in the first 8 weeks. If the stock has raced up 20% in a few weeks, it is time to be a pig.
- Holding onto winners requires courage and patience. Raise your stop loss based on support and resistance points, or any other timing mechanism you prefer. After a strong uptrend, most stocks WILL flash sell signals that WILL get you out before the peak. Recognizing these signals is the key. Remember Lefevre in Reminiscences of a Stock Operator, "It was never my thinking that made big money. It was always my sitting." It takes courage to be a pig.
- Losing is part of the game. Good traders always know they will come back to win, and do not worry about looking stupid because they have lost in some trades. In fact, you will probably have more losers than winners. However, your losses must be kept small and you should allow your winners to run.
- Manage your portfolio risk correctly. Initially, do not invest more than 5% of your portfolio into any single stock. Aim to hold 10 to 20 stocks in your portfolio. This will minimize the negative effects a single name will have on your portfolio.
- Learn effective money management. Pyramid up (buy more shares) when the stock moves in your favor. Always channel your money into profitable positions. Pyramid down, only if you absolutley know what you are doing. In other words, don't.
- There's always the Wall Street fool who must trade all the time. If you find that most of your last trades have gone against you, scale back and rest awhile.
- Do not day trade.
- There's more to life than trading.
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