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3 Stock Trading Secrets For Profitable Investments

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The stock market offers a multitude of opportunities for success. But why do some investors seem to be doing better than others? What are the secrets that they know, that you may not?

Read on as we reveal some of the stock trading tips and tricks that could lead to generating more profits on your investments.

  1. Knowledge is everything

As a stock trader, especially when day trading, it’s vital to keep up to date with the latest news and events that can affect the market. This can include monitoring the movement in interest rates, the economy of certain nations and worldwide events.

Always research the stock market and the companies in which you are investing, so you know the types of events that would affect their value. A top tip is to continuously read the business and finance news from reputable websites.

Look for sites that offer analysis or insights also, so that you can enhance your trading strategies and predictions.

Another insider secret is to make full use of an economic calendar. These types of calendars effectively track the events that can impact the stock market, and therefore are a great tool to plan your trades around the potential impact of future events. An economic calendar will usually include key influential events, reports and announcements, such as:

  • Interest rate decisions
  • Non-farm payroll numbers
  • GDP announcements
  • Consumer Price Index (CPI)
  • Purchasing Managers’ Index (PMI)

With a wealth of knowledge about the stock market and key factors that influence price movements, you are more likely to invest wisely, and profit as a result.

  1. Practice with a demo account first

Did you know that some online trading platforms give you the opportunity to open a demo account first? This means you can benefit from practicing your trading techniques with virtual assets and capital, before investing with real money. As previously mentioned, knowledge is everything, and so this type of account allows you to gain more understanding of the stock market. A demo account is a great way to simulate potential trading strategies before moving to the real-time market, and helps to avoid mistakes and possible losses, as well as work out ways to improve your techniques. Once you’ve practiced on a demo account, its time to move on to a live account.

Another tip, when opening an account using real money, is to look for an online exchange or trading platform that allows for the opportunity of leverage in trading. If practised during a demo account, then you would know that leveraged trading allows for more exposure to the market, but with less initial capital required. It can help to enhance your profits, but also the losses. Trading leverage varies across brokers and platforms, so research beforehand which one works best for you, the leverage ratios, and practice trading with leverage on a demo account first.

  1. Use emotional discipline

You may think that investing is all about intelligence, but the main thing that successful traders have, is control of their emotions. A good trader has the ability to make quick actions, as well as decisions, and maintain their pre-determined strategy, without being affected by emotions such as greed, hope or fear, or trying to chase the profits.

Successful trader, Victor Sperandeo is famous for saying:

“The key to trading success is emotional discipline. If intelligence were the key, there would be a lot more people making money.”

The secret is to develop your emotional discipline so that your trading decisions are made using logic, and that you don’t abandon your strategy or formulas based on an emotional response. There are certain steps that you can follow that help you develop a more controlled approached to trading:

  1. Be consistent: Set out a strategy before you begin, and maintain throughout. Make sure to trust in your research and analysis, and stick to this strategy. Try not to let yourself be influenced by others, as it may not suit your trading techniques.
  2. Open small positions: Chasing after a big win is not good emotional discipline and can cause you forget your strategy. Begin with small amounts, as this gives you greater control, but also the opportunity to increase your position in the future.
  3. Remember the whole picture: It can be easy to become fixated with microdata, so make sure to keep in mind the overall picture and your long-term plan. Your goals should be realistic, to help you to avoid making rash decisions towards unattainable targets.

If you continue developing your emotional discipline, then you can build upon good trading habits, stay neutral whilst trading, and essentially increase your chances of earning a profit.

PM Today Contributor
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