ASX Investor Newsletter – 5 Top Trading Tips

On the surface, you wouldn’t think there would be too much to trading shares: you only have to buy and sell; what more could there be?

As anyone will tell you, there is a lot more to it than you initially think. This might be the first tip to getting started in trading equities.

Here are five rules to consider:

1. Be well prepared

Most traders will agree that to be successful in the markets you need to develop a trading approach that is right for you and suits your personality.

First, I would suggest conducting a self-assessment to determine the following:

  • Your own goals and objectives in entering the market.
  • Your own personal strengths and weaknesses.
  • Your tolerance of risk.
  • Your patience.
  • The amount of time you are prepared and can afford to commit to trading.
  • Your level of self-confidence.
  • Your discipline.

Questions regarding your money management include:

  • What is your trading capital?
  • What is your risk amount?
  • How will you determine your position size?
  • What is the maximum amount of your trading capital you are prepared to commit to a single trade?
  • What will be your maximum risk exposure at any one time?
  • How will you determine your initial stop-loss level?
  • How will you determine your trailing exit level or profit target?
  • After losing what percentage of your capital will you cease trading?

Questions regarding your entry decisions are:

  • What financial products will you trade on what market?
  • Over what timeframe will you trade and how will you identify trends?
  • Will sector analysis play a part in your trading decisions?
  • What conditions will you use to determine a trade entry?
  • Will you trade “at market” or “at limit”?

Read more at the September 2016 ASX Investor Update newsletter …