Rule #3 - Never Try to Catch a Falling
I occasionally break this rule because its easy to want to buy stocks
that are going down. I'm here to tell you that while you may get lucky in some instances, never buy stocks that are
going down because they are already doing what you don't want them to do. Resist the urge to buy stocks on the dip but
instead, follow my next rule about buying stocks when they are going up.
Rule #4 - Buy Stocks that are Going Up
Buying stocks that are rising is one of the most important stock
trading rules. A stock that is going up is already doing what you want it to do. I scan the market for the hot stocks during pre market trading, I watch them, and get ready to stike when the opening bell rings.
Rule #5 - Buy Stocks Breaking Through their
High of Day
One of the most successful stock trading strategies I know is buying
a stock that is breaking out through it's established high of the day. Especially between 10:00am EST - 11:00am
EST. Stocks that break through their high of the day tend to attract even more buyers or shorts who need to cover because
the stock is going up. Watch out for false breakouts however. The most volatile trading time can be right when
a stock opens. Wait until atleast 9:35am to jump into a stock that is running to the upside. My ideal situation
is a stock that opens at $3.50, sells off to $3.10, but by 10:00am EST comes back near the high of the day ( $3.50 ) and then
breaks through. The volume will increase and the stock should begin rise up further. Keep in mind, this will
not always work but I have had a high success rate. It is important to note that I always keep a tight stop. For
instance, if the stock breaks $3.50 and runs to $3.65, I will either sell some or see if it has more room left to run but
I will always sell if it breaks back below that original high of day level of $3.50 or whatever it is at the time. It
is very important to get back out and avoid holding on if the stock turns back around on you and you didn't take profits when
you have them. If you are new to stock trading, test this strategy out on fake paper trades.
So there you have it, those are my top five rules that I try and follow........to
be continued with stock trading rules 5 through 10 when I get time!