Super Trader, Expanded Edition: Make Consistent Profits in Good and Bad Markets
is a great book it will help you become a great trader from inside out. I completed reading the book now and I learned a lot. I did all the exercises that are provided in the book. The most useful exercise that I found was about how to solve your inner conflicts and how to act against our instinct of self-sabotage.
The most important thing that I learn from the book is that you have to keep learning and there is no end to it. If have forgot that for quite some time. Now I am starting back.
You develop as a trader as you go on. The most important possible thing that you can do as a trader or investor is not to repeat your mistakes again. In that way you can grow no matter what.
You can use technical analysis to improve your chances in the stock market.
After reading this book I keep journal of the things that I did wrong and how not to repeat the mistake again. Some of things that I learned by doing this are:
- Never run behind the market when price are moving fast you should wait for them to settle.
- Always sell at your stop.
- Never trade because you have remaining capital in your account find good trade
The most important thing that you have to learn as a trader is mange your risk.
You have to get most possible return by taking less risk as possible. A good rule of thumb will be to risk 1% of capital on a trade. For example if you have capital of Rs. 1,00,000 you will risk Rs. 1000 per trade. This is one of the method that is described in Super Trader.
How to calculate the number of share?
Now you know that you need to risk Rs. 1,000 on trade; you can now determine the number of shares you should trade. For example, current price of the share you want to trade is Rs. 50 and your stop-loss is at Rs 45.
So the risk per trade is Rs. 5 so you can buy 200 stocks of that company. I usually buy less than that because you will get need to add commission and government taxes and all. So buy 10% less than the number you got from the previous calculation. In this case it will be 180 share of that stock.
The simple thing is “Cut Your Loss Short and Let your profit run”.
Ask this question to yourself everyday have you cut your losses short and let your profit run today?
If answer to the question is yes then tap yourself on back.
If the question is no then ask yourself. What is the reason that I did not follow my plan? Then you should make plan if same situation come up again what will you do. After you have thought out your plan you should visualize the situation happening again and you are applying your contingency plan. If you want to read more about it you can read Super Trader.
I think you should read or at lest review the main points of Super Trader once a month so that you can absorb all that is in there.
You can read more about how to become great trader. You should keep learning if you want to make consistent profit in market. Because markets are always changing you have to change too you have to adapt to the changing market.