In a previous post I gave some stock tips that successful traders use. I will now provide here some additional tips for your review. I hope they will be of assistance to you.

You should be impatient with losing positions. Never carry a losing position more than two or three days. This rule is used by one of the successful traders as a way to force discipline. He says that “Over the last two or three years, blindly following this rule has saved me from some huge losses.”

You should avoid picking tops and bottoms. When you go against the trend, believing that the market has either topped or bottomed, you are making yourself vulnerable. Successful traders prefer to let the market price action prove that a top or bottom has been formed.

There is an old stock market trading rule that states bull markets can fall flat of their own weight. So be very careful if it appears that the prices are top heavy and be sensitive to bearish news. However, you want to make sure you do not sell out too soon and miss out on a significant rally.

Look for opportunities where the loss opportunity is small in relation to the profit potential. Watch where the price is in relation to its lows and also what the trend is. If there is a lot of potential upside in relation to the trading range, this may be a golden opportunity to buy. If the trading range is low, the purchase is probably not worth your time.

This brings us to the tip that states you should know the price trend. Use charts and technical analysis to determine where the stock is trading. Use the rule that you do not buck the trend. Knowing the actual trends will help you in your trading decisions and provide opportunities for you to make money with your stock investments.

Some successful traders will watch for when the price breaks above the trend line. If the price stays above the trend line for two to three days, it is usually a good trading signal. If the price was in a downward trend, it is a buy signal and if it is in an upward trend, it would indicate a sell signal.

Watch for the magnitude of change. If the market is moving lower but by a smaller amount each day, it may be a signal for an uptrend. The opposite would be true if it is moving upward but by a smaller amount every day. This may be a signal for a potential swing downward and would indicate a sell signal.

Be very astute with the watching of head and shoulder formations. When you observe a chart pattern that resembles a head and shoulder, it is usually a sign the market is topping out. These patterns are not so obvious until the second shoulder is formed by a rally or sideways pattern. Also along this line is to watch for “M” tops and “W” bottoms. When the price chart indicates a “M” it is a sign to sell. If there is a “W” it is a good sign to buy shares now.

I hope these tips are helpful to you in your trading system. Remember your stock trading strategies should always be ones that advance your profits. If you find you are in a position that you are losing money, have the discipline to cut your losses and move on. Too many times we seem married to a stock due to the fact we are in a loss position. We keep hoping the stock will turn around. There are too many other good uses of your money. The longer you wait, the higher the potential is for a loss, but also you lose the opportunities to create a bigger gain.

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