All successful traders of the stock market have regimented guidelines that they follow on a daily basis in order to be successful in trading stocks. We have presented a few here that we would like you to carefully read, understand, and implement:

• Cut your losses. Each trader has their own guidelines in cutting losses. Every trade you enter should have a stop loss that you feel comfortable with. The real question is ... "How much are you willing or can afford to lose?" Every trader has his or her own risk tolerance. In general, we recommend a 3% stop loss (maximum of 4%) on every trade you enter.
• Trading wisdom says never marry a position. Sometimes inexperienced traders will do the exact opposite when the market turns against them. They'll watch passively as a loss builds, and keep postponing the decision to get out. As it gets progressively worse, the stock eventually becomes the monkey on their back, draining their life force and willingness to act. Always remember to cut your losses!
• Understand the technicals, trust your instincts, and pull out early before the masses.
• Make your own decisions, and take responsibility for your own actions.
• Do not get carried away by your emotions when you make a trade — be as mechanical as humanly possible. We all get emotional when we take a big loss from time to time — they are impossible to avoid. Winning streaks and drawdowns will test trading strategies and rational behavior during the course of your career.
• Trade what you see, not what you think, and don't let the big picture ruin what's right in front of you.
• Don't trade at the market open. Have you ever gone to sleep so excited that you can't wait for the opening bell so you can place a buy order? Bad move. The opening is usually the worst time of day to enter new trades.
• Do not spend thousands of dollars on questionable software — pretty colors and faster executions will not make you a better trader, but they can make you a poorer one. The bottom line is that kilobytes can't overcome poor skills. In fact, some professionals still draw their charts by hand. Why not save your money until you see the market the way they do?
• Trading and gambling are two different things, but you'd hardly know it during earnings season. How often do you carry a position into a big earnings report, hoping to get a pop from the news? Hmm..., I thought so. You can get hurt real bad when you trade wearing a blindfold. In general, it's best to exit a trade prior to the information becoming public knowledge.
• Profits are an illusion until you put the green in your pocket. Don't fixate on your profits and losses when you have open positions, because that money isn't yours. Good positions will move around and make you crazy before they get to the reward target.
• Never put all of your eggs in the same basket. Diversify, diversify, diversify! An investor should always attempt to minimize risk. High risk is putting too much capital in the same stock. However, be careful of diversifying by trading many of the same type of stocks. Meaning — don't buy all technology stocks. Diversify in different sectors.
• Understand support and resistance levels. It is best to exit a trade prior to the masses.
• Traders need to lose money in order to make it, and that's life in the markets. A loss is a good thing when taken in moderation. In fact, few other disciplines require constant loss in order to reach the intended goals. Expect the pain of losing money to stand beside profit throughout your trading career. But take steps to limit the damage through careful preparation and effective risk control.

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