Note: Stock trading requires a personalized trading strategy
*A method that specifies the type and amount of patience
*Entry and exit points
*Your customized psychology plan
*Risk management program based on your personality
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Trading Rules:
Rule 1: Always Use a Trading Plan
A trading plan is a written set of rules that specifies a trader's entry, exit and money management criteria. Using a trading plan allows traders to do this, although it is a time-consuming endeavor.
With today's technology, it is easy to test a trading idea before risking real money. Known as backtesting, this practice applies trading ideas to historical data, allows traders to determine if a trading plan is viable, and also shows the expectancy of the plan's logic. Once a plan has been developed and backtesting shows good results, the plan can be used in real trading. The key here is to stick to the plan. Taking trades outside of the trading plan, even if they turn out to be winners, is considered poor trading and destroys any expectancy the plan may have had.
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