Technology has really changed the outlook on how stock and shares are traded. Who remembers always remember the shouting match from the movie Trading Places? “Sell, Sell, Sell you idiot”, shouted Randolph Duke (Ralph Bellamy) before he had a heart attack. The trading pit has long gone and trading on computer exchanges is now the norm. But HFT’s (High frequency trading) is increasingly become the game changers for institutional brokers. Retail traders continue to be battered daily by those who have the power and clout to shift the goal posts. Nonetheless, all is not lost. Stick to your plan and goals and always be ready to adapt to the changes that continue to come. Look for a way to ride the ‘waves’ that HFT’s ride, and you’ll be plain sailing.
1. Keep your emotions in check: Try not to trade when you’ve had a bad day. Wife / Husband issues – leave them at the door. This will only subconsciously mess up your trades.
2. Focus on companies and not just stock prices: Anything can change. Stock price is looking good, but news out there is that the CEO is having a personal meltdown. You’d be best to keep your watchers on. Buying a share of a company’s stock makes you a part owner of that business. Choose your companies wisely and either stick with them for a season or diversify your portfolio. This all depends on your strategy.
3. Be a 1% percenter: Stick to our 1% rule. We hear of traders making a great sale here and there – they got lucky. This isn’t a luck game. This is a numbers and probability game. Build up your stock positions with a minimum of risk.