5 Golden Rules For Small Cap Stock Traders

Small Cap Trader — Wed, 12 Aug 2009 11:11:36 +0000

In order to be successful in stock trading, you have to plan few guidelines. If you pursue these tipes religiously, you will make money with stocks. Naturally you probably might end up with losses if you break your own rules. Hence it is advisable to follow these rules no matter what. You can go for Stock trading software as a shortcut. However sticking to your stock trading rules will definitely be worth during the long run, it is a discipline that will help you make big wealth. So read the following rules before you enter the stock exchange.

Top 5 Rules For Trading Small Cap Stocks

Small Cap Stock Trading Guideline No 1: Master a trading style.
Different people will have various stock trading styles. Don’t try to do them all. You continue learning and practicing at the one style of stock trading that is best for your approach. Never jump from one method to another. You should become an expert at 1 trading style rather than trying to make poor attempts at employing numerous method.

Small Cap Stock Share Trading Guideline No 2: Never risk over three% of your total investment on any one stock.
Protecting your primary capital is vital if you want to trade stocks successfully. Keep in mind that your aim is not to purchase the firm, you are just trading their stocks to gain profits.

Small Cap Stock Trading Guideline No 3: If your prediction is incorrect, cut your losses at maximum of 15%
This is very important. Many traders make the mistake of sticking a loser while intelligent traders will minimize their loses and move on. The significant tip here is to place stop losses and minimize your losses if your assumptions went wrong. Keep to your stop loss point and analyze the performance of your stock.

Small Cap Stock Trading Rule No 4: Always set price targets.
Before share trading set price targets. Don’t be too greedy and try to get the most out of rising share price. A stock price can increase too high too quickly and can also fall too drastically.

Small Cap Share Trading Guideline No 5: Do not break the rules.
Like I mentioned before you must stick to your own rules to make profit in stock market.

Use These Small Cap Stock Trading Rules In Other Investments

Similar rules are applicable in currency trading market as well. You have automated forex software robots like Forex Megdroid, though sticking the system is the key to profits.

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5 Golden Rules For Small Cap Stock Traders

How To Buy Top Small Cap Stocks

Small Cap Trader — Mon, 06 Jul 2009 09:34:59 +0000

Although it may seem obvious to most stock market traders there are a number of simple rules that you can follow which will ensure that you have more success when buying small cap stocks.In the USA stock market there are 3 major indexes which are each made up of a basket of stocks, they are the S and P 500 (also known as the S&P500), the DOW 30 and the Nadaq 100. These stock indexes generally only contain major blue chip stocks, as long as you buy from these 3 groups you will at least know that you are getting a well known solid stock. For example the DOW30 contains major industrials and large multinational stocks such as Home Depot (HD) and Johnson and Johnson (JNJ) whereas the Nasdaq 100 mainly contains techical companies such as Apple (AAPL) and Miscrosoft (MSFT).

Buy Small Cap Stock Companies That Have Money

Always buy a stock that is liquid, this means that it is a highly traded stock, this will enable you to easily buy and sell at the price you want without having a delay. You will also get a smaller spread, thats the difference between the BID and ASK price of the stock. For a stock to be considered highly liquid it should trade at least 500,000 shares per day, ideally even more.

Be Cautious With Small Cap Stocks

It is best to avoid stocks that are bellow $10 as this usually means the company is in trouble, although with the bear market of 2008 there have been a lot of good stocks at bargin prices between $5 and $10. Avoid buying a stock below $5 at anytime. Another consideration is options, does the stock has options?, this will be important if you want to trade options around your stock, such as a covered call, or you may want to buy a PUT option inorder to protect your stock. Be very cautious about buying a stock just before it’s earnings release, stocks often drop significantly if you come out with a poor report. Earnings releases are 4 times a year with one of them being the annual report. If you are going to trade options make sure that you learn how to trade by getting some good education. There are many swing trading strategies that work well with stocks in todays volatile markets.