Stock - Fundamental Guide To Safe And Profitable Trading

Many seek to succeed in stock and option trading. But the majority loses in their endeavor to reach the success. The game doesn’t seem as easy as it might look like. If you ever started trading and got confused of when to place order, when to take profit, how to protect your equity and you toiled with anxiety and hesitation in making decision, then you have come to the right site.

have come to the right site. Even if you are considering to start joining the trading world as a newbie and learn how to trade well and safe, this book will definitely serve as your fundamental guide in your attempt to develop your trading skills.

Stock and option trading has become a great attraction for decades, but why most traders lose and washed out of market? Emotional and careless trading is one of the most likely answer. Do you feel confident or anxious while place an order? Do you feel delightful or doubtful while close out a trade? Are you strongly elated while gaining profit from a trade and tensely sorrowed while losing from one?

Psychology is the Fundamental Key

Most traders expect to enter a good trade. Once they enter, they lose control by riding an emotional roller coaster and miss the essential factor of winning emotion management. Their inability to manage their emotion leads them to fatal failures.

Most of the time, traders are strongly influenced by their expectation of gaining high profit while at the same time lost their awareness of the market reality. Market is harsh and shows no pity. If you ignore movements in the market crowds, then you will miss out the chance of making money. To stand as a successful trader you need to keep your focus on reality, recognize the changes and trade based on them, not waste time and energy on regrets and wishful thinking.

Successful traders are hardworking and witty men/women. Ironically, their main goal is not to make money but to trade well. Trying to reach their best performance is far more important than making money. They are so focused on trading well and improving their skill that money no longer influences their emotion.

Traders who are not confidence at themselves always try to fulfill their wishes regardless of market reality. Once you enter a trade, you cannot control the price. Worrying about the price would only paralyse your focus and ability to trade. Stop worrying about where the price goes, but start worrying about what to do when it gets there and plan it ahead. By doing this, your trading is free from emotional response and becomes systematic and stress free.

If you do not plan ahead where are you going, you will end up somewhere you never wanted to be.

Emotional Trading

Your feelings and emotions have a significant impact to your trading success. You may have a fullproff profitable trading system, but if you feel upset, fear, arrogant or doubt while you trade, your account is sure to suffer. While you recognize a gambler’s high or fear clouding your mind, stop trading. Your success or failure as a trader highly depends on managing your emotions.

The market does not know you exist. You can do nothing to influence it. You can only control your behavior. This is the same thing as a surfer cannot control the waves but he can control hismself not to be wash out by them.

A trader has to study trends and reversals the way a surfer studies waves. He must start with a small scale while learning to handle the market or precisely - himself. You can never control the market but you can learn to control yourself.

A new trader who has a string of winning trades often feels he can walk on the water. He starts taking wild risk and blow up his account. On the other hand, an amateur who suffers a streak of losses feels so demoralized that he cannot place an order even the obvious signal passes in front of him.

Fear and Greed

An amateur trader that feels elated or frightened cannot effectively use his intellect. When greed overwhelms him off his feet, he will make irrational and reckless trades only to suffer loss. When fear grips him, he will miss the profitable trades.

A professional trader uses his logic and stays calm. He acts accordingly to market reality not based on his own wishes claiming on unrealistic expectation.

The Myth

Most amateurs have a fantasy that in order to succeed they need to be highly educated and supplied with equipped with firsthand information. But the fact is that trading is intellectually quite simple. Good traders are often shrewd, but few of them are intellectual. Many do not have college background, and some even dropped out of high school. What separate winners from losers are neither intelligence nor secrets, and definitely not formal academic education?

Take the Full Responsibility

Successful traders are always aware of their decisions and take full responsible of their actions, while losers tend to blame someone or something for the consequences of their results.

You need to be aware of your tendency to sabotage yourself. Stop blaming your losses on others, situations or bad lucks and take full responsibility for the results. Records all the history of your trading, and learn from the failure. Look for repetitive patterns and make use of it for future benefits.

Plan Your Trade and Trade Your Plan

Planning a trade is the next step after you convince yourself to trade in emotionless manner. Your trades must be based on clearly defined rules. Take a look at the following scheme.

You are looking at a good stock X trading at $30 and you place a buy order at $32. The next thing you must do is making a plan of bad and good scenario.

Your plan could be like the followings. After I enter the trade: If the price goes down, where should I place my stop loss? How much can I bear to lose? If the price goes up, how much profit I expect to gain? How do I exit the trade? If the price goes my favor, should I buy more?

You already have those kinds of questions answered before entering the trade you place at $32. Your trade plan is filled in and you place your stop in $30.

The price goes up beyond your second buy order $37 and your stop is moved up to $35. The price keeps rising and you keep moving up your stop at a safe distance to protect your profit.

Your exit stop is hit at $45, and you sell almost mechanically and gain your profit without hesitation and regrets.

By learning to plan your trade and trade your plan, you know beforehand how to act on every situation that might occur. You will then be trading professionally and not emotionally. You won’t be afraid of a loss too big to bear, or a profit too small to gain. Your trading will become systematic and stress-free.

Trading versus Gambling

What if you buy and the market immediately goes down? What if you sell and the market immediately goes up? Even the best traders lose money sometimes in some trades.

The answer is to draw a line between a business risk and a loss. A business risk is a maximum a mount of money you can bear to lose. There is no standard dollar amount as there is no standard business. A smart businessman will only take risks that will not put him out of business even he makes several mistakes in a row.

If a trader risks more than his business risk, he crosses the line that separates trading from gambling. Instead of intellectually and calmly cutting his loss, he emotionally expects for reversal without judging the market realistically. You can surely see this model in casinos and race tracks. To a gambler the whole market is like a big casino. He gets greedy and risk too much on a trade, and short streak of losses wipes him out of market

If you bail out of trade within you business risk, it is normal. There is no bargaining, no waiting, no emotionally hoping for another tick. If you take this concept of business risk, it will change your entire paradigm of trading and your way of money management. This concept give you a distinctive picture between trading and gambling.

Money Management

Money management is a very important tool to ensure survival, to avoid your from being put out of business. Money management helps you gain a steady rate of return as well.

As a guide, 2 percent rule keeps you out of risky trades that can do harm to your account. For example, you have $10,000 in your account, you may only risk up to $200 per trade. If your plan triggers an attractive trade with a $150 risk, then you may only trade one contract. If the risk is only $50, then you can afford to trade two contracts. Even if you want to add up your positions while the market moves in your favor, this rule must be followed as well providing you are at a break-even position and you move up your previous stop. You make sure the additional positions do not exceed 2 percent of your trading equity.


If you keep trading less emotionally and stick to you money management rule, your trading will definitely be stress-free and you can focus on analyzing the market. This report serves as an essential and fundamental guide needed by every trader. In addition to this report, you may want to continue to studying market analysis to improve your trading knowledge. Please refer to for more information.

Hopefully this simple and basic guide will be useful to you. Wish you a safe and profitable trading. Good luck.

About the Author:
Guide to safe, profitable and stress-free trading
Joshua Stephanus
Tag: stock

[tag]stock, trading, stock trading, safe stock trading, trade stock safely, profitable stock trading[/tag]

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