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Stock Trading Tips

-

Mind of a Successful

Trader

Disclaimer

Trading stocks, especially low-priced stocks, is VERY risky.

You are on your own, no warranties.

Check with a qualified investment professional.

Do not invest more than you can afford to lose.

This is not investment advice.

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In talking with people who want to learn how to trade with great

profits, or who ask me to evaluate stocks for them, I notice that there is

a difference in the mindset, in addition to the procedures that we

use to evaluate trades.

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This will focus on the difference in the mindset that let's you pick the best stocks,

and not the stock scams.

First, the successful stock trader thinks only of the future.

Stock traders, stock pickers, are in the business of prediction.

Those who invest successfully

are not excited that the company has just made a big announcement - they want to find a company that is about to make a big announcement.

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Thus, the old saying,

“buy on the rumor,

sell on the news.”

Anticipate. Predict.

Or another old one, buy straw hats in January.

You buy in advance of the demand if you want to take full advantage

of the hottest stocks.

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If the stock is trading in a dull,

lackluster fashion, the

question is will it go up?

Most traders ignore such stocks because there is no

"action" in them.

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In fact, Wall Street is the only business where to get more buyers, you increase the price. In the retail

business, if you are selling straw hats, you lower the price and

announce a sale.

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Stock manipulators, on the other hand, use increases in

price and volume to get buyers. If you are buying only

the most active stocks, you are probably losing money.

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If you are buying only those that hit new highs, you are

probably losing money.

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One of my favorite hunting grounds is the list of new

lows (Note, however, I know that stocks move in trends and I do not get in front of

moving trains that are going down.)

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Second, I instinctively go against the crowd. You want to buy cheap and sell high,

right?

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Well, stocks are cheap when nobody is buying, duh.

And stocks are high when everyone is buying.

Enough said.

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When I was telling people to buy the day after the crash in 1987,

nobody wanted to listen but you could have bought blue chips

names below almost below their cash per share and certainly

below their liquidation value.

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I got on a financial radio show in Miami and told people

"mortgage your houses and buy, you will never see these

prices again!"

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Only one person called and he didn't buy anything.

Yet the market never saw these prices ever again.

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There is an indicator out there called the consensus and it tells

you what percentage of folks are bullish and bearish. We also note

that contrarian investors are successful but not wildly so.

There is more to learn.

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Start thinking of the future. What has happened now, what you

know now, is only your starting point. What will happen next? Is there a trend or is this move the

first leg of a reversal pattern?

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Buy value and look for the cheap stocks that have a good

future of ahead of them.

Anticipate and predict.

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Third, the successful trader, while he wants to know

everything before he buys, does not wait to know why to

sell.

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If the price declines sharply and suddenly, the up trend is broke and the trader does not know

why, it means something is wrong and he sells as a knee-jerk

reflex action.

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He knows that about six weeks from now, when the price is

much lower, he and the world will know, but right now the

trader knows that he must sell to save his skin.

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Fourth, the successful trader is a professional and he is constantly looking to keep up with the latest techniques, to learn more, and he

spares no effort in his quest for more knowledge. Yet he knows that it is the basic principles that are the

most powerful.

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He focuses on the application of these principles by learning,

learning, learning. He invests in learning, even knowing that

some of this might be wasted. He is always looking for the latest

improvement, the secrets of trading.

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Finally, the successful trader deals in action. He makes decisions. Once he has enough to make a

decision, he acts or not.

In the stock market, it is action that makes you money!

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Discover more free at

Investing-Performance.com

or

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Get “How to Find a Home Run Stock” Or

“How to Pick Hot Reverse Merger Penny Stocks”

on Amazon.com

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John Lux is a former OTC Market Maker, venture

capitalist, investment banker and attorney.

Copyright ©John Lux 2011