Friday, June 15, 2012

MONEY MAKING TIPS


I was reading an article, based on interview with a Trader, which I feel worth sharing

1) TRADE ONLY WITH WHAT YOU CAN AFFORD
      Trading always carries element of risk. Therefore to enter into trading activity one should be prepared to lose the investment. It is therefore advisable to NOT to trade using one’s  Life savings, Instead use a Limited Spare fund which can be risked for Loss.
   
2) THERE SHOULD BE STRETEGY FOR EXIT
      When entering into trade, one should have a plan, What you want to get from that trade. Therefore a strategy for exiting a trade is a determining factor of the outcome.
6% to 10% positive move seems to be ideal target. One should not be lured for endless gain within a trade, else it ends up in Capital loss.  

3) TRADE USING STOP-LOSS ORDER
      Stop-Loss order is a automated order placement to sell, once the price reaches a price point, which is a comfortable level for the investor, for bearing loss. This prevents loosing money continuously.

4) WHEN TO TRADE.
      It depends on the person’s ability to identify the direction of the market, and trade in the same direction as that of market.

5) UNDERSTANDING PRICE MOVEMENT
      At time markets seems predictable. The target prices where the stock goes and may meet resistance. This situation can be capitalized by entering at the right time, capturing that move and moving out when the stock seems to touch a level, from where it may potentially fall.

6) BUY HIGH AND SELL HIGHER
      Some experts feel that when the market is having a northwards flight, one should make his pick and get out when your exit target is achieved during this upward flight.
When the markets are falling, they seems to be falling endlessly. This falling market is never right to enter, as erosion of capital seems inevitable is such situation.

7) PRE-LEARNING BEFORE TRADING,
         It is said “INFORMED INVESTOR IS A SMART TRADER”, it is always rewarding if one is educated about the trade before investing, rather then doing practical first without learning theory.

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