There is much disagreement over what constitutes the correct stock trading position size as a portion of your overall trading capital.

Using your stock trading trend indicators is the best way to determine how much you should bet on each trade.

If your analysis and indicators are very strong, bet more. If you have only one indication that a trend is going in a particular direction, bet small as you can always increase your investment as the trend is confirmed in your direction.

And diversify to spread your risk. Not only in different securities but also different sectors. If all your investments are in technology stocks you are not really diversified at all.

Dave J

Too many online stock traders fail to sell winning stock trades.

A winning trade can turn into a losing trade if you don’t have good trading management tools. The most basic mistake it to fail to have a stop-loss in place to protect your gains.

Then traders, who miss exiting at a high point, whilst the price drops back assume that the stock will attain that height again and hang on in the hope that it will. At this point they could still sell and lock in a profit but they hang on hoping for the market high. In fact, the trend is now in the opposite direction and they can not only lose all their gains but make an actual loss.

You need to understand that numerically you are likely to have more losing trades but that the winning trades will more than offset this if you exit them at the right time.

Todd B.

Stock trading systematically is the best way to strip out the emotion that can get attached to online stock trading.

Traders will often bet a larger some of money on the next trade after a winning trade. Conversely, they may be reluctant to trade at all following a losing trade even when there are sound technical reasons to do so.

It is important therefore to have a trading plan based on your technical analysis that imposes a discipline on your trading. Remember, that trading is a business and it should be approached as coolly as possible.

And don’t prefer being right with making money. This can come about when a trader refuses to take a loss on a trade, convinced his initial analysis was correct and that the price will somehow climb. If your stop-loss rule says sell, then sell! Not being able to take a small loss, often results in a large one.

Dave J.

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Stick to the stock trading trend if you want to be a successful online stock trader.

There are so many factors that can influence a stock price at any one time that you can’t possibly take into account all of them.

You will receive conflicting ‘advice’ from brokers, economists, analysts, advisors, etc but the single best way to know waht is happening to your chosen stocks is to follow the trends.

Buy only when a new uptrend starts and sell when it peaks and you will be in the money over the long run.

Timing is everything in stock trading, so buy and sell when your trading plan and stock charts tell you to.

And, remember, you only make money when you sell. Too many people hold on to a stock too long, obsessed by the idea that ‘buy and hold’ is the best strategy. Be sure to sell when your technical analysis tells you to.

Todd B

Over the next few weeks we’ll be looking at using technical analysis tips to help with your online stock trading.

Whatever your style of trading these tips should help you become a better trader.

Reading and understanding  stock charts is the essence of technical trading. After you have done your fundamental research to determine which stocks to trade in, you turn to your charts for when to execute your trades.

Once you have prepared your chart and your plan, stick to it. Don’t be influenced by ‘outside’ factors like news developments, expert opinions and such like. Your charts contain all the information you need and if information is really significant your chart will reflect it.

Dave J

The best way to improve your stock trading skills is to keep a track of all your trades, what works, what needs improving, etc. So, after each trade carefully record all the details of what went right and what went wrong. The easiest way to improve anything is to first measure it and therefore you should measure all your trading activity in a stock trading journal.

You can then review the contents of your journal at the start of the stock reading week. Remember also, that failure is probably a better teacher than success so make sure you record and review your failures as well as your successes no matter how uncomfortable that may be!

You need to know what works and what doesn’t if you are to keep improving your trading plan on an ongoing basis and the best way to do that is to record everything in a stock trading journal.

Todd B

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Dave J

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Todd B

The one of the best ways to beat stock trading risk is to plan your exit.

Planning Your Exit

Is is very important to strip out the emotion from trading and therefore wise traders will plan their exit position long before they even open a trade. It is all too easy to get seduced by a winning trade and try and ride it all the way to the top. Conversely, people will hang on to losing trades for far too long in the hope that they will bounce back.

Make a plan and stick to it, if you have made a mistake, admit to it and exit early.

Stick To Your Chosen Signals

Even when you have made your plan you may be tempted to enter or exit a trade as it approaches your chosen signal. Be patient and wait until it does otherwise you are anticipating the trade and may as well be trading on a whim.

Dave J