Top 20 Stock Market Trading Tips

These are the Top 20 Stock Market Trading Tips Gathered from Numerous Web Sites:

1a. Put your trading money in as many stocks as you can afford. The more diversification the better, as it helps reduce risk.
1b. Don't invest in more than five stocks, as it is hard to keep track of them when you get beyond that number.

2a. Use limit orders to sell. As a trader, you should already know your exit price, and you could miss getting the price you want, just by getting up to go to the bathroom.
2b. Never use limit orders when you sell. Good news could come out on the stock, and you will end up being the first one to sell after the stock takes off, causing you to miss a lot of the upside. Always use market orders.

3a. Use limit orders when you buy. When a stock spikes downward, you may not be fast enough to get in your Buy order, so with a limit order, you are sure to get it at the price you want it at.
3b. Never use a limit order to buy a stock. The company could come out with bad news, triggering your limit, and dragging you down with the stock price.

4a. Never chase a stock that gaps up; it usually always drops back down shortly thereafter.
4b. Always look for stocks that gap up as they usually continue to run up more for a while.

5a. When a stock makes a big unexpected move up, sell and don't look back.
5b. If your stock moves up substantially, sell half your position and hold the other half to let it run.

6a. Look for stocks to buy just before they go ex-dividend, in order to capture that dividend.
6b. Never buy a stock just before it goes ex-dividend as the stock usually drops by the amount of the dividend and more on the ex-dividend date.

7a. Look for stocks trading at new highs. They are the strongest stocks with the most investor backing.
7b. Look for stocks trading at new lows, and you will find plenty of bargains and dead cat bounces.

8a. Always trade on margin as you get much more bang for the buck.
8b. Never use margin. You can easily get wiped out.

9a. Never let your emotions interfere with your trading decisions.
9b. Usually, your gut decisions about trading are your best ones.

10a. Read as many newspapers, watch as much business TV, and look at as many online financial web sites as you can in order to get trading ideas.
10b. Ignore all external financial sources. Develop your own trading ideas.

By Fred Fuld at Stockerblog.com