Stock Market Trading: The 20 Rules of Engagement
"Good traders know how to make money; great traders know how to take a loss," and 19 other truisms to trade by.
If you identify the right entry through the lens of time and price, you will create an advantageous risk/reward. It is rarely smart to slap on an entire position at one price level; scaling into risk is often smart, particularly if you're new to a stock and unfamiliar with how it trades.
12. Perception is reality in the marketplace.
When it comes to the process of price discovery, it's not "what is" that matters; it's "what's perceived to be" that dictates the supply and demand in the marketplace. Identifying the prevalent psychology is extremely helpful in determining whether to ride the wave of momentum or take the other side of conventional wisdom.
For more professional trading and investing tips, check out Minyanville's new MV Education Center.
Todd Harrison is the founder and Chief Executive Officer of Minyanville. Prior to his current role, Mr. Harrison was President and head trader at a $400 million dollar New York-based hedge fund. Todd welcomes your comments and/or feedback at firstname.lastname@example.org.
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