The four rules to follow in the stock market


Any buyer who decides to acquire the shares should memorize and follow certain rules. Have the rules is very important, because they help the “focus” of stock exchange operator in the sale and will avoid such proceeding to the “blind” with the consequence of losing money. You should know that trading is not something easy and affordable for everyone! The key objective of the stock market is to make money and not lose them!

Here I will report a list of helpful tips that will definitely help you in the free stock trading: whether you are new to investing in the stock market or the most experienced players, I am sure that these tips will guide you in the right direction and will help you to avoid losses.

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Rule 1- Do not be “greedy”

Greed in the stock market is never a good thing! If, for example, you bought a stock at 5, you see that in a short time increase in value up to 7-8 and did not begin to take profits, it will be a strategy that sooner or later will lead to safer loss! No one has ever lost money by making profits! After all, the objective of the actions of the market is to make money, right? In some cases, greed can make you do a lot of money initially, but eventually you will get only disappointment. So, take your profits when you and revalued them again your actions. If you want to succeed in the stock market, strive to sell shares when you have profit then move on to the next sale.

Rule 2- Do not buy stocks in freefall

From time to time, this rule is broken, because it is easy to want to buy stocks that are going down. I am here to tell you that while you might be lucky in some cases, never buy stocks that are going down because they are already doing what you do not want them to do! Resist the temptation to buy this type of action!

You may also like to read another article on heygom: How to learn to move in the stock market in 5 stepsĀ 

RULE 3- Buy sharp increase actions

The acquisition of shares that are growing is one of the most important rules in the stock market. An action that is going up is already doing what you want me to do! So scrutinize the market of the “hottest titles” during the negotiation and get ready to play when the opening bell.

RULE 4- Buy shares in the best moment of the day

One of the purchasing strategies of the most successful actions that I know is to buy a stock at the time of day precise, especially between 10.00am and 11.00 am, when the stock will reach its “maximum” peak. The shares purchased in that time frame and that they reach their maximum daily, tend to attract more buyers because the title is going up. Beware the false breakout (a price move that breaks a support, a resistance, a technical analysis figure).

The ideal situation is when a title that opens, for example, to 3.50 dollars, sells out to 3.10, but no later than 10:00 am back near the high of the day and then breaks through. The volume will increase and the action should start to rise further. Keep in mind that this does not always work, but the success rate is high. It will also be important to have a “stop loss”.

The technique of the stop loss order works in this manner. Practically it has the aim to limit a possible loss (stop loss) of a trader in that it establishes a duration parameter and the threshold price (maximum price) beyond which it must sell (or buy in the case of a market order). Put simply communicates to a value, if the market reaches a higher or lower value than the starting price, the broker will automatically sell or buy. If that is communicated to the trading software a value below which you have to sell (stop loss), the action or the security is sold immediately limiting the capital loss to 1% or 2%.