#Trading tip: The strongest #stocks never revisit their breakout level. They move strongly direct after the breakout. That's how you recognize a potential big winner.
5 things #boosted my profitability as a #trader:
1) Decreasing number of stocks in my watchlist
2) Trade less, but higher quality
3) Stricter stock selection criteria (technicals & fundamentals)
4) Letting profits run if stock above 21 EMA
5) Start every trading position small
William O'Neil Rule: “I make it a rule to never lose more than 7 percent on any stock I buy. If a stock drops 7 percent below my purchase price, I will automatically sell it at the market – no second-guessing, no hesitation”
You cannot control the stock market, but you can control
– when to trade
– how much you lose
– when to take profits
– your reaction to the market
– how big your position size is
– to sell before earnings
What else?
The most #traders do not understand that cutting losses is part of the #trading business! It's not about being right and hoping that the trade will turn around. It's about cutting losses, so that the winners can easily wipe them out. It's only about statistics, nothing else!
Do the hard thing when it comes to trading! That's often the most profitable:
1) Buy new 52 week or all-time highs
2) Buy big gap ups
3) Cut losses quickly
4) Ignore fancy trading methods
5) Getting rich slowly, but steady
6) Keep to your rules
7) Slow down trading speed
#Mindset tip: Your goal shouldn't be "I want to become a successful trader". Instead do & think like a successful trader. You don't want to reach a goal, you want to change your identity. If you accept the new identity, you brain will do everything necessary.
A big mistake in #trading: FORCING TRADES! If there is nothing to trade, don't search for trades. Be patient and wait until setups pop up in your screeners and the market offers you a window of opportunity again.
You really have to consider trading like a business. What I often say is that if your run a company you invest and
pay charges before making money. You buy raw material, you pay wages.
Why should it be different in trading?
You cannot make 100% or more return in a stock if you leave no room for consolidations or corrections. Allow the stock to pull back to its EMA 21 or even EMA 65! Otherwise you choke off super stocks too early.
I like to only hold enough cash to buy half of a new position, and then be forced to sell an existing position to buy the other half. It forces you to sell your weakest positions to add new ones. A smaller cash position keeps a stock picker honest/less sloppy.
The only reason why we do a valuation exercise at Zerodha every year is for our ESOP buyback.
I keep getting asked why are we valuing ourselves at
just $2Billion currently when smaller players are raising money at far higher valuations.
Here is why we're conservative👇 1/8