Top Trading Rules of Wealthy Traders
Rule No. 1 - Let the profit grow and cut short the losses. They use strict entry and exit rules. They do know when to exit a trade on either side whether in profit or loss.
Rule No. 2 - Always look at the charts to find the support and resistance area; where other traders are lining up to buy or sell.
Rule No. 3 - Don't try to buy at the extreme bottom or sell at the extreme top. They always wait for the price to rebound if the price is falling. Same way, just opposite to sell the stock. They try to eat middle part of the overall trend.
Rule No. 4 - Don't think about the market as being cheap or expensive. They keep on trading based on their set of rules. They know that market can stay cheap of expensive for a longer time. There is nothing cheap or expensive in wealthy traders' mind. They only think if there is someone going to pay more or less for a stock just after an hour, a day, a week or a month.
Rule No. 5 - Don't use too many indicators at a time. They always keep their trading very simple. They always look at the pure price action. All of them may be using different indicators but they don't use many at a time.
Rule No. 6 - Don't average the losing trades rather increase the position size in winning trades; and by doing this they limit their losses and grow the profit in winning trades.
Rule No. 7 - Do read a lot about market psychology to understand the reasons behind price action and impact of a news on the masses.
Rule No. 8 - Don't hope or pray in the market. They take actions based on the based on the changes in prices. They are less concerned about being right or wrong rather they are more concerned more about making money.
Rule No. 9 - Practice reading right side of the chart and not the left. After having a look at the left side that has already happened so far, they always try to figure out that what is going to happen next. They do practice to form the next candle in their mind that how it is going to be; after all practice makes us perfect.
Rule No. 10 - Don't judge your success or failure of life based on trading. Making money in the market doesn't make you a good or bad person. It has nothing to do about overall success in life.
Keep on learning!