Short Term Trading Tips

Here are some basic short term trading tips:

* Look at a small group of stocks that behave within size and volatility parameters that you are comfortable with.
* Look for a strong over-bought or over-sold stocks. (e.g., market closes up or down for 4 to 6 straight days).
* Have an exit strategy and price target in mind.
* Place a stop below the most recent low of the last down day so that the difference between that low and the entry price is the risk of the trade.
* Ensure that the reward-to-risk ratio of any trade is at least 3 to 1.
* Raise the stop when the market makes a new level of support and rises to a new high
* Never have more than 2 or 3 active positions at a time so that trade monitoring can be carefully managed.
* Re-evaluate your strategy regularly to reflect ongoing market mood. Ask yourself: “Did I make any mistakes? Did I follow my rules?” Based on your response you can record any mistakes, assess the impact of the mistakes and take corrective steps to avoid those mistakes in the future. Remember, these strategies are critical to developing strong, consistent performance and profitability.