10 Rules For Successful Stock Market Investing

Back-test your system. Develop a group of entry-exit rules that are based as much as is possible on back-testing.

Learn your system. Study your system till you know it inside out. Study books and charts. Attend conventions. Confirm your system is trustworthy before you employ it.

Be discipline. The most significant quality of a technician is the self-control to stock to a system. Buy when it is saying buy ; sell when it is saying sell.

Don’t rationalize. Often a stock will move counter to what you wish would occur and when your system gives a sell signal, you will try to rationalize hanging onto the stock. Don’t! Hear your system!

Stick to your rules. More than any other style, technical research takes the emotion out of investing, which explains why it has comparatively low risk ( if you have got a proved, back-tested system ). But you should stick to your rules.

Confirm your system is applicable for today stock market conditions. Some signals work fine in a bullish market but stagger in a bear market ; others shine in a bear market and give confusing signals in a bull market. Some MACD technicians use one kind of MACD in bullish conditions and another type in a bear market. Be conscious of whether your system is acceptable for the present conditions.

Don’t force your system on a stock. Technical signals work the best on stocks that have well-defined trends.Don’t attempt to force signals onto stocks that do not have acceptable patterns. Use technical screens and filters to find stocks with good patterns.

Be looking out for new indicators and new systems. Technicians develop new signals and new systems all of the time.

Take your losses fast. If your indicator gives an exit signal that will end up in your taking losses, take it even if you purchased the stock. Your indicator is trying to tell you that you definitely made a mistake! You have to be ready to confess you were wrong and take your medication, if you do not, the issue will be inflamed by the indisputable fact that your indicator has given an exit signal ; it will not do you any good to sit around and wait for another. This is as critical for the technicians as for the momentum financier.

Take the exit signal when it comes, and keep your losses tiny.