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 … 

Stuart McPhee
Stuart McPhee
Australian private trader for nearly 20 years, author, trading coach, licensed adviser and regular speaker at major trading events all around the world. Graduate of RMC Duntroon and former Australian Army Officer.