Wednesday, March 4, 2015

5 RULES to prevent a BIG losses in Trading

Few days ago I met up with some investors, they asked me to help the check out their stocks. Some of the stocks is in terrible condition, usually the common question is "Should he/she buy more at current price?"or "Should he/she Sell now?" When your stocks is down 50% it is really not easy to answer the 2 question above, however, lets think about why you think the price up if you continue holding? If you cant find any reason for it to go up, then you should not be holding on to a losing counter. I always tell my client, a big loss always start from a small loss, cut loss when it is still small. 

5 RULES to prevent a BIG loss in Trading

  1.  Never follow other people/GURU/INSIDER/FRIENDS/REMISIER to get in a trade.
  2.  Never trade just for 1-2bid, it doesnt work here in Singapore unless you are getting super low commission. Many people thought it is easy to make 1-2bid, so they buy ALOT of shares, the price up a bit, they can run away with small profits, however many times they cannot react fast enough to the opposite direction and get caught with Big losses.
  3. Never RISK more than 2% of your portfolio in a single trade, you cant win every trade, some times you will have losses, the rule of the game is to win more than you loss, Win big when you win, Lose Smaller than what you win when you lose
  4. Never Average down a Loser, buy stocks like you are investing in a business, Dont put in more capital on the business that is losing money! Invest more on the business that is making you the money!
  5. Never trade without an Exit Strategy, knowing how you get in is easy, however many people always do not know how to get out when the PROFIT and also when they making LOSSES. Below is some of the example of how you can exit before big drop in the stock price using ART Supertrend System

 Ezra changed trend since August 2014, never show green candle since then, our Smart money index show no more Smart money in the stocks. Mostly retail money stuck in the stocks.
 Ausgroup change trend Since Aug 2014, our Smart money index show no more Smart money in the stocks. Mostly retail money stuck in the stocks.
Mirach Change trend since September 2014, our Smart money index show no more Smart money in the stocks. Mostly retail money stuck in the stocks.

Related Posts Plugin for WordPress, Blogger...