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Technology has outdone itself these days. May it be in simple means of communicating or in much more complicated business or moneymaking transactions, the use of the computer has become very apparent in most people’s lives.

In stock trading, the rise of the market transactions online has become quite prevalent over the past few years. Many institutional investors prefer to use sophisticated computer technology to assist them in making investment decisions. And many people argue that computers may just be better at picking stocks than traditional human brokers.

Although program trading may perform a lot of sophisticated utilities, you may wonder whether or not these can really be better aids for trading as compared to traditional brokers. At the end of the day, remember that what technology has to offer are mere recommendations and ultimately, the decision is still up to you.

Taking The Emotions Out of Stocks

One of the most common arguments that many people who choose to make use of computer technology in trading is that by not having to deal with many emotions that human brokers may have in stock picking, then computers can offer more objective recommendations to the investor.

Because most computer programs cater to quantitative models by searching through layers of data to look for stocks that are compatible to be bought or sold, then the computer’s lack of the ability to become confused from human emotions can be very beneficial. Remember that by taking out human emotions like pride or greed, choosing the right investments in quantitative models can perhaps become more lucrative.

No System Is Perfect

Though computers can be very promising tools in trading, take note that no system is always perfect. Since humans are still responsible for building the said models in which computers revolve in, there fundamentally are sill biases in the system. And even the most sophisticated computers cannot always report for all the variances out there in the market, at least, not at the moment.

One very common problem encountered with the use of computers is that may times, computer programs often end up recommending the same stocks on their lists. And if a hundred of these programs analyze companies at the same time, then they would most likely be giving the same recommendations to so many clients. And at the end of the day, investors would still have to fight for stocks.

When many people generally want to invest in the same stock and the demand goes up, what happens in the market is that prices also go up, and this can be very bad for the investor.

And so, the ultimate question is whether or not computers are really helpful in making trading much easier for you. The answer is to this is yes and no.

Although computers can surely help you in so many ways by foregoing of the usual distracting human emotions and can even analyze data much faster, remember that it is still a system that has yet to be perfected. And despite the many benefits, there are underlying flaws that can still make the trading game a jungle to get involved in.

The stock market with its unpredictable behavior can surely be a difficult arena to take on. And so, take note that whatever assistance you would want to use, whether sophisticated computer equipment or more traditional brokers, at the end of the day, your decisions would still be the make or break factor in order to become successful in your endeavors.

Among many stock traders, one mistake commonly made is that investors may often exhaust themselves on merely thinking about buying stocks without foreseeing that there may come a time that they may need to let go of such stocks for lucrative reasons. Sometimes, you may realize that selling can really be more practical than holding on to something that may cost you more in the long run. Let us learn why and when you should sell stocks.

When Your Stock Investment Is No Longer Doing Well

One very major reason that you may need to consider selling your investment is when it has gone sour by underperforming in the market. There may come a time when investing on certain stocks may even cost you more than the actual gains that you get in return.

There are times however, when you do not necessarily have to sell within the instant. Make sure that you check possible reasons why your stock has not been doing well, certain factors like the wrong market timing or the occurrence of certain changes within the company may normally cause some decline in stock behavior.

But when you have noticed that your stock has not been meeting your expectations for a consecutive number of trading quarters, and then it may certainly be wiser to just save yourself from a bad investment.

When A Better Opportunity Presents Itself

Another good reason to sell your stock is when there is a better opportunity available in the market. This is a frequent reason for many people to sell stocks and may create a churning in an investor’s portfolio, which may mean that the investor’s account extremely active through frequently purchasing and selling in order to generate profits.

As what has been previously mentioned, once you believe that an investment has truly gone sour and it would be quite difficult to rise above the decline, then the best option for you would certainly be selling and looking for better opportunities available.

When Your Reason For Investing Is No Longer There

Lastly, another of the most common reasons why you should sell your stock is when you have lost your belief in your investment. If you have lost or have already met your reasons for investing, then, it may be normal for you to feel that you should sell your stock.

There may be many reasons for you to invest on stocks and some of these may perhaps be the possibility that you want to gain commissions from a certain company or perhaps you truly believe in a certain company’s product.

However, when the time comes wherein you no longer believe in investing in your stocks or you have lost your reasons to do so, then selling your shares may be the right thing to do.

It is only smart if you are an investor to not only think about purchasing or buying stock shares and to stop at that. There really must be a certain degree of preparation on your part to be willing to sell your investment at some time. After all, if your investment no longer proves to be practical for you to keep, then selling it may be the best move for you.

Remember that for you to be successful in stock trading, you must be prepared with the many highs and lows of the game. Keep in mind these reasons stated above on when you should consider selling your stocks and perhaps, the selling option could be a great route for you to rise above declines.

The trends in stock trading are very volatile and consistently fluctuating. If you are interested in investing in this economic jungle, you might find yourself surprised and confused with the differing trends and patterns in the market. And often times, it may be very difficult to find good stocks where you can invest with much ease.

Getting to know the right stocks to gamble your money on is very critical. And in doing so, it is very important that you understand how the company you are giving your investment to makes a substantial amount of money. Unless you have a full grasp on a company’s market, products as well as its competitive strengths and weaknesses, it would be pretty difficult for you to foresee whether or not your investment is profitable.

Get The Right Help

The very first step that you must take is basically to get the right people to help you in making good and lucrative decisions. First of all, find a good broker where you do not only gain a lot of savings from commission fees, but also make sure that you find one that will assure you of your investment’s production.

It also wouldn’t hurt for you to seek advice from experts regarding which stocks would give you good results in the stock market. If you are new to stock trading, this will be very vital. Remember that in order to be good in trading, sufficient experience and skills are needed, but for a beginner, using the knowledge and advice from a more experienced person may be the next best thing.

Try To Check On Investment Ideas

Try taking a trip to the mall and see which type of businesses are doing well in the market. It could also help if you check your own cupboard to see which products consumers like you would most often buy. By doing these things, you can find companies that could not only give you an assurance of success, but ones that you can possibly understand better as well.

Check For Competence

Take note that you should not stop at only understanding companies that you invest in. Make sure that you check on a company’s strength in competing in the business world as well. After all, you may know and believe in the product, but if it will not assure you of profit then your investment will still go down the drain.

A company you invest in must be able to display excellent economics. Having an attractive price for consumers as well as a management that is friendly to shareholders can guarantee good returns for your investment.

Remember that stock trading can be a very good way to earn, but remember that good returns can only come if you are smart in doing business in this confusing field. The market is full of competitors, and many stocks available are not necessarily good ones.

Always do your research on the companies you invest in before making rash decisions. Aside from this, make sure that you adopt the best strategies in the market, and you can do so by getting the right help especially if you are new to trading.

With the ever changing and volatile behavior of the stock market, make sure that you remain smart in your investments. Take the extra mile, and you will realize that all of your efforts will pay off once you get good profits.

Trading in the stock exchange is not a simple matter. It can be very challenging and may require a lot of time, knowledge, skills, and patience. If you do not practice trading in a smart and strategic manner, you will surely end up losing more than what you have bargained for.

Here are some major things that you must do in order to improve your chances in successful stock trading. Let us discuss what these things are and how they can help you in smart trading.

Trade With Money That You Can Manage To Lose

Stock trading can be quite a gamble. Your chances of earning can just about equal to your chances of losing, and in some cases, there are even greater risks of losing more. Money that you will need for survival should never be used in trades.

Because most trading markets can be very unpredictable, make sure that you make use of money that you can afford to lose. It may be too risky to invest money that you will badly need for your daily living or for your future. Always take note of the risks involved and what you are particularly risking in the exchange.

Always Trade In Reasonable Sizes

Some markets in the exchange are able to allow individuals to trade very large amounts of leverage. And so, a lot of people trade in large quantities in order to assure larger profits. However, doing this may also open up the possibility of losing money in such large quantities as well.

It is always wiser to scale your trades in order to lessen risks. Never trade sizes that can wipe you out of all your money. And you would have nothing to lose if you actually start small, and grow your transactions from there.

Identify Market States Before Trading

It is also very vital that you are aware of how the market is doing before you start trading. Take time to find out if trends are going up or down. If the you know whether the market trends are weak or strong then it may become easier for you to make the right decisions in your transactions.

By getting a good picture of the situations in the market, you can easily lay down a plan for conducting a successful trade. Things would become easier for you to foresee what must be done when you have a good idea on what may happen. In this way, you may prevent making a lot of wrong choices.

Set A Time Frame For Trading

Even if the main goal of trading in the market is to merely make a lot of money, planning beforehand when you would like to get out of the game can save you from a lot of risks.

The trading industry is consistently moving, and through the transition of time, prices may evolve. Because of this, there can also be a growing exit price. Although it may be impossible to absolutely determine when you would exactly quit the market, it could be helpful if you at least place your trade in perspective and find out when you would best collect the exit price. Doing this contributes to liquidity in the movements of the market.

Anyone who will lead you to believe that it is easy and it is always a sure thing to make money in stock trading is being untruthful. Remember that this particular market, by nature, is a volatile and consistently moving industry. And so, you must be aware of the different trends as well as formulate a good and strong strategy to weather whatever obstacles may come.

In order to make a successful trade, you must take into account the technical as well as fundamental factors in order to make good and informed decisions. Make sure that you use your knowledge and skills in determining a strategic plan to go about your trades. Achieving success in this industry is not as easy as it may seem, but with a little hard work, you may just get great results.

Exchange Traded Funds Are Good for Investors

Exchange Traded Funds (ETFs) are growing. Investors are choosing low annual expense and market return over high annual expense and promised performance.

Total ETF inflow is growing faster than Mutual Fund inflow. ETF inflow grew from $42.5 billion in 2000 to $54.4 billion in 2004. In contrast, mutual fund inflow fell from $309.4 billion in 2000 to $180.3 billion in 2004. Standard & Poors Depositary Receipts Trust (SPY) is the largest and oldest ETF. From the one fund SPY started in 1993 the number of ETFs has grown to 150 in 2004.

Growth of ETFs is fueled by investors searching for market performance. About 20% of conventional mutual funds do beat the market. The puzzle is which funds will win, in the future. ETFs, on the other hand, have a reasonably good record of matching the performance of their underlying index. For instance, in 2004, SPY value grew 10.92% and the value of the underlying S&P 500 index grew at 10.88%. The promise of the conventional mutual fund is that it will deliver superior results. The promise of the ETF is that it will match the performance of its underlying index.

Expense for ETFs is less than for conventional mutual funds. A prime reason for the mutual funds’ higher expense is that pros perceived capable of superior results are more expensive than technicians paid to duplicate the holdings of an index. ETFs are passive investments and don’t require the active management of pros. Investors moving money from mutual funds to ETFs are trading promised performance and high expense for market returns and low annual expense. ETFs generally have expense ratios below 1. SPY’s expense ratio is .12. Expense ratio is percent of assets consumed by fees annually.

Investors sticking with mutual funds have a couple of things going for them. Eliot Spitzer has used his New York State Office of Attorney General to scare/shame mutual funds into minding fiduciary duties to their investors. The growth of ETFs is pressuring mutual funds to reduce their expenses and to introduce ETFs mimicking mutual funds. Investors sticking with mutual funds might benefit from the growth of ETFs. However, mutual funds might have a hard time delivering. Slowing growth or actual decline in fund size will make it difficult to reduce their expenses enough to keep investors happy. The more investors defect the fewer left to share the expense.

ETFs trade like stock equities. They can be bought and sold whenever the market is open. They can be shorted, purchased on margin, and optioned. Most brokers charge a commission for every buy and sell transaction. This can be a problem for small investors building a portfolio with monthly contributions. There is at least one broker that charges an annual fee rather than per trade commissions.

ETFs are passive. They only trade when changes are made to the composition of the underlying index. Fewer trades mean less tax consequence. Mutual funds often have taxable capital gains, sometimes even in years when the fund has declined in value (sell winners and hold losers).

That 20% of mutual funds beat the market is a premise. It assumes multiply years and a market defined as the S&P 500. Meg Richards writing for The Associated Press reported that for 2004:

* The S&P500 bested 61.6% of actively managed large-cap funds.
* The S&P400 bested 61.8% of actively managed mid-cap funds.
* The S&P600 bested 85% of actively managed small-cap funds.

The probability of a mutual fund having beaten the market in 2004 is low. Of course, relative performance changes from year to year. Relative performance, of active versus passive management, changes. Relative performance, of individual actively managed funds, changes.

The best ETFs strategy for small, beginning, busy investors is to ‘buy and hold’ SPY. If you are bigger, experienced, or have time on your hands you can try a more active strategy. A strategy that beat the S&P500 over the last three years is to hold equal amounts of five large diversified ETFs and rebalance weekly. This strategy is in some ways just an expansion of our definition of ‘the market’ beyond the S&P500. This strategy since inception 3 years ago has beaten the S&P500 just over 1% annualized. This small gain means rebalancing weekly is only viable when it is without trading cost. A more aggressive strategy is to monitor 50 ETFs and hold the most oversold, rebalancing weekly. This strategy since inception 2/27/04 has beat the S&P500 by 16%.

Remember. ETFs’ popularity is on the rise. They trade like stocks. They have lower annual expense than mutual funds. Their objective is to mimic the performance of an index. They don’t beat or lose to the market, they are the market. It is usually best for low maintenance, ‘buy and hold’ investors to define the market as broadly as possible.

ETFs provide individual investors with a way to lock in market returns while minimizing expense. ETFs have grown as investors become educated about the disadvantages of conventional mutual funds.

Lyle Wilkinson, investor, trader, author, MBA Helps individuals learn to self direct their stock portfolios. Book, e-book, PowerPoint “DIY Portfolio Management” http://www.diyportfoliomanagement.com mailto:joe@diyportfoliomanagement.com

Article reprinted with permission from netterweb.com

There are three important differences between investing and trading. Overlooking them can lead to confusion. A beginning trader, for example, may use the terms interchangeably and misapply their rules with mixed and unrepeatable results. Investing and trading become more effective when their differences are clearly recognized. An investor’s goal is to take long term ownership of an instrument with a high level of confidence that it will continually increase in value. A trader buys and sells to capitalize on short term relative changes in value with a somewhat lower level of confidence. Goals, time frame and levels of confidence can be used to outline two completely different sets of rules. This will not be an exhaustive discussion of those rules but is intended to highlight some important practical implications of their differences. Long term investing is discussed first followed by short term trading.

My mentor, Dr. Stephen Cooper, defines long term investing as buying and holding an instrument for 5 years or more. The reason for this seemingly narrow definition is that when one invests long term, the idea is to “buy and hold” or “buy and forget”. In order to do this, it is necessary to take the emotions of greed and fear out of the equation. Mutual funds are favored because of they are professionally managed and they naturally diversify your investment over dozens or even hundreds of stocks. This does not mean just any mutual fund and it does not mean that one has to stay with the same mutual fund for the entire time. But it does imply that one stays within the investment class.

First, the fund in question should have at least a 5 or 10 year track record of proven annual gains. You should feel confident that the investment is reasonably safe. You are not continually watching the markets to take advantage of or to avoid short term ups and downs. You have a plan.

Second, performance of the instrument in question should be measured in terms of a well defined benchmark. One such benchmark is the S&P 500 Index that is an average of the performance of 500 of the largest and best performing stocks in the US markets. Looking back as far as the 1930′s, over any 5 year period the S&P 500 Index has gained in price about 96% of the time. This is quite remarkable. If one widens the window to 10 years, he finds that over any 10 year period the Index has gained in price 100% of the time. The S&P500 Index has gained an average of 10.9% a year for the past 10 years. So the S&P500 Index is the benchmark.

If one just invests in the S&P500 index, he can expect to earn, on average, about 10.9% a year. There are many ways to enter this kind of investment. One way is to buy the trading symbol SPY, which is an Exchange Traded Fund that tracks the S&P500 and trades just like a stock. Or, one can buy a mutual fund that tracks the S&P500, such as the Vanguard S&P 500 Index Fund with a trading symbol VFINX. There are others, as well. Yahoo.com has a mutual fund screener that lists scores of mutual funds having annualized returns in excess of 20% over the past 5 years. However, one should try to find a screener that gives performance for the past 10 years or more, if possible. To put this into perspective, 90% of the 10,000 or so mutual funds that exist do not perform as well as the S&P500 each year.

The fact that 10.9% is average market performance for the past 10 years is all the more remarkable when one considers that the average bank deposit yield is less than 2%, 10 year Treasury yields are about 4.2% and 30 year Treasury yields are only 4.8%. Corporate bond yields approximate those of the S&P500. There is a reason for this disparity, though. Treasuries are considered the safest of all paper investments, being backed by the United States Government. FDIC regulated savings accounts are probably the next safest while stocks and corporate bonds are considered a bit more risky. Savings accounts are possibly the most liquid, followed by stocks and bonds.

To help you calibrate the safety and liquidity question, the long bond holders are comparing bond yields they now receive with next year’s anticipated stock yields. Consider that next year’s anticipated S&P500 yield is around 4.7% based on the reciprocal of its average price to earnings ratio (P/E) of 21.2. Yet the 10 year annualized return of the index has been 10.9%. Bond holders are prepared to accept half the historical yield of stocks for added safety and stability. In any given year, stocks may go either up or down. Bond yields are not expected to fluctuate widely from one year to the next, although they have been know to do so. It is as if bond holders want to be free to invest short term, as well as, long term. Many bond holders are thereby traders and not investors and accept a lower yield for this flexibility. But if one has decided once and for all that an investment is for the long term, high yield stock mutual funds or the S&P500 Index, itself, seem the best way to go. Using the simple compound interest formula, $10,000 invested in the S&P500 index at 10.9% a year becomes $132,827.70 after 25 years. At 21%, the amount after 25 years is more than $1 million. If in addition to averaging 21%, one adds just $100 a month, the total amount after 25 years exceeds $1.8 million. Dr. C. rightly believes that 90% of one’s capital should be allocated over a several such investments.

Now that you’ve allocated 90% of your funds to long term investing, that leaves you about 10% for trading. Short to intermediate term trading is an area that most of us are more familiar with, probably due to its popularity. Yet it is significantly more complex and only about 12% of traders are successful. The time frame for trading is less than 5 years and is more typically from a couple of minutes to a couple of years. The typical probability of being right on the direction of a trade approaches an average high of about 70% when an appropriate trading system is used to less than about 30% without a trading system.

Even at the low end of the spectrum, you can avoid getting wiped out by managing the size of your trades to less than about 4% of your trading portfolio and limiting each loss to no more than 25% of any given trade while letting your winners run until they decrease by no more than 25% from their peak. These percentages can be increased after there is evidence that the probability of choosing the correct direction of a trade has improved.

Intermediate term trading is based more on fundamental analysis which attempts to assign a value to a company’s stock based on its history of earnings, assets, cash flow, sales and any number of objective measures in relation to its current stock price. It may also include projections of future earnings based on news of business agreements and changing market conditions. Some refer to this as value investing. In any case, the objective is to buy a company’s stock at bargain prices and wait for the market to realize its value and bid up the price before selling. When the stock is fairly priced, the instrument is sold unless one sees continuing growth in the value of the stock, in which case he moves it over into the investment category.

Since trading depends on the changing perceived value of a stock, your trading time frame should be chosen based on how well you are able detach yourself from the emotions of greed and fear. The better one can remove emotions from trading, the shorter the time frame he can successfully trade. On the other hand, when you feel surges of emotion before, during or immediately after a trade, it’s time to step back and consider choosing your trades more carefully and trading less frequently. One’s ability to remove emotions from trading takes a great deal of practice.

This is not just a moral statement. An entire universe of what’s called technical analysis is based on the aggregate emotional behavior of traders and forms the basis of short term trading. Technical analysis is a study of price and volume patterns of a stock over time. Pure technicians, as they are called, claim that all pertinent news and valuations are imbedded into a stock’s technical behavior. A long list of technical indicators has evolved to describe the emotional behavior of the stock market. Most technical indicators are based on moving averages over a predefined time period. Indicator time periods should be adjusted to fit the trading time frame. The subject is far too large to do it justice in less than several volumes of print. The lower level of confidence involved in trading is the reason for the large number of indicators used.

While long term investors may use only a single long term moving average with confidence to track steadily increasing value, traders use multiple indicators to deal with shorter time frames of oscillating value and higher risk. To improve your results and make them more repeatable, consider your expectations of changing value, your time frame and your level of confidence in predicting the outcome. Then you will know which set of rules to apply.

James Andrews publishes the Wiser Trader Stocks and Options Newsletter. Information on selected stock market trading systems, including those of Dr Stephen Cooper, can be found at http://www.wisertrader.com/tradingsystems/stockandoptiontrading.html. © 2004 Permission is granted to reproduce this article, as long as, this paragraph is included intact.

Article reprinted with permission from netterweb.com

1. Never put up trading money you can’t afford to lose.

Never trade with your house payment, rent, car payment, etc. Never mortgage your property for trading capital. You are playing with fire if you violate the first rule of trading. The fact will always remain that you can or may lose a good portion or even all of your trading capital. This is why rule #1 is so important.

2. Keep your trading costs down.
There are many great brokers that offer low cost commissions, with great service and excellent trade executions. If you are a high volume trader or a frequent trader, you can save a good sum of many just by trading with a different broker. Sometimes the difference between being profitable and trading with a loss can be the cost of commissions. Explore your options, check out several brokers.

3. Be a student of the markets. Learn and use both Technical Analysis and Fundamental Analysis.
The top pros in every profession are constantly trying to improve their game. Trading is no different. It is one of the most competitive industries in the world with some of the brighest people involved in it. You should constantly be a “student” of the market(s) you are involved in. Constantly learning and improving your edge. Don’t rely only on Technical Analysis or just Fundamental Analysis. Although you may focus on one, understand how both pictures can influence the market.

4. Do your own homework.
Never trade solely on someone else’s suggestion or tips. Study methods are markets that you are unfamiliar with completely for YOURSELF before you put trust in it. Understand the idiosyncracies of the signals of each before you trade with it. Be responsible for your own decisions.

5. Pick your spots to enter the market. Do not enter the market blindly just because it’s moving.

Find your entry points based on careful evaluation and analysis. Don’t rush into a market just because it is moving up or down right now. Markets have a tendency to move back to retracement levels. Find an entry point based on careful analysis and stick with it. Then make small adjustments if you do not get the fill you want… but, NEVER chase a market just to get in…just find another entry point. Chasing markets usually end up being very costly.

6. Have your gameplan in advance. Don’t make it up along the way.
This goes along with rule #5. Have an overall trading game plan, and a plan for each particular trade, and stick with it. Realize trading plans involve time of entry, price of entry, contingency plans, price and time of profit and total time anticipated for the trade, along with stop loss plans. And those are just the basics. Without at least, these basics involved in each trade, you are trading haphazardly, and possibly blind.

7. Always use protective stops.
A successful Chicago floor trader once said…”Always keep your powder dry…You need your ammo for the next battle.” In other words, if you blow all of your capital or most of it on one trade, you won’t be around to trade another day. Trading opportunities come and go, but they will always appear again in the future. Always use protective stops so that you will have capital for that next trade.

8. Always use price profit targets to close part or all of your position.
A good rule of thumb is to take half of your position off the table if you are fortunate enough to be on a trade that doubles in value. This way you get your initial capital back, and still have money on the table for the trade to mature even more. A better rule of thumb is to take all of your money if you realize a double in a very quick amount of time, and then reconsider and re-evaluate the market and your options.

9. Never let a winning postion turn into a money losing trade.
If you use stops and move them along with profitable winning positions you can protect your profits. For example, if you are long only move your stops UP, if you are short, only move your stops DOWN. Move your stops only in the direction of the PROFIT. Not the other way around. Also…

10. Never let a “pre-stopped loss” turn into a bigger loss.

The brother of rule #9…Never let a small loss turn into a bigger loss. Never let a pre-determined stop loss turn into a larger losing trade. Get out when your stop is hit. Never widen your stops on a losing trade, just to stay in the trade. By changing your stop you are potentially opening the door for a much larger loss and you are deviating from your trading plan. Don’t do it. Never let a potentially small loss turn into a potentially big loss.

11. Never over-leverage yourself.
Never trade more stocks, options, or futures contract than you can afford to lose. Sure if you win it’s great, but if you lose it’s that much more dangerous.

12. Always take trading breaks. Get rest.
Trading is exciting and exhausting. Although not much physical energy is involved (unless you are a floor trader), the mental energy used is tremendous. Take breaks away from the markets just to refresh yourself, and get a different perspective on the markets and life. There is more to life than trading. Remember this.

13. Diversification is important…and safe.
The old saying goes, don’t put all of your eggs in one basket. Diversify your capital into different stocks, futures, or whatever you are trading. Keep in mind to diversify into different sectors too.

14. Don’t try to make it all in one trade, or one day, week, month, or year.
Let your methodology work for you. Making money in trading consistently is the key….and becoming a consistent trader takes time, patience and skill. There is no such thing as instant or overnight success in trading and investing. Look at trading or investing as a career or profession (even if you are only involved part time). Treat it seriously. Do not take it lightly… and remember rule #12.

15. Learn from your mistakes.
This is why rule #4 is so important. When you study your trades and understand WHY you are trading the market….When you lose money with an un-profitable trade, consider it an error in judgement, and learn from it, so that you avoid making the same mistake(s) in the future. Pros rarely make the same mistake more than once, amateurs keep on doing the same stupid things over and over. You can not afford to be an amateur in the trading business. Consider your losses an education at the “UT” – “University of Trading”, and then remember them.

Keeping these 15 rules in mind when trading should help you minimize losses and maximize your return on investment.