6 Ways To Improve Your Stock Trading In 2010

December 16th, 2009 | Filed under: Trader Lessons,

Just like we have New Year’s resolutions, the year end also marks a convenient time to adjust our current stance in the market. Whether that means reloading on your portfolio or completely altering your trading strategy is obviously up to each individual trader.

Here are 6 ways to improve your stock trading in 2010.

1. Diversify

One of the key factors that led to the success of my ’4 stocks to buy in 2009′ was diversification. With passing years come new trends, and, within each year, sectors can boom at different times. By gaining the exposure to different environments will not only lead to better overall returns, but it also limits our risk at the same time.

2. Asset Management

Its amazing how many different investment vehicles there are nowadays. They all have there own pros and cons and individual reasons for using one. For example, you have stocks, bonds, mutual funds, ETFs, retirement accounts, and so on. See what kind of plans your brokerage and/or employer offer.

3. Examine Your Trading Strategy

With all the noise and media coverage, it is very easy to get distracted from your current trading strategy. Maybe the strategy you’re using right now isn’t meant for you. Examine your strategy and see if it is working for you. Are you looking to minimize your risk? Do you want larger returns? Perhaps you prefer to use technical analysis over fundamental analysis. Whether you just need to focus back on the basics or alter your trading style, make sure you do this before completely blowing up your portfolio.

4. Plan Ahead

As any trader knows, you must be able to read and react to be successful in the stock market; however, sometimes this can be made easier by planning ahead. If you think oil will be strong in late summer, then keep possible related stocks on your watch list, so you’re well aware of how they move before its time to actually buy some.

5. Keep A Trading Journal

Its amazing how much you can learn from previous trades or stocks that have been kept on your watch list. What is even more amazing is how many people don’t track this and conduct the same mistakes over and over again. If you’re not already, consider starting a trading journal. Track dates, current stock price, future price targets, and what actually happens. Then every quarter (or as many times as you deem necessary) review the journal and see what change(s) can be made to improve your trading.

6. Learn Something New

What makes the best athletes stand out from the rest is that every season they add something new to their game. Why not take a page out of their book? Learn something new. A trading strategy, some form of fundamental analysis, learn how to short stocks, etc. Even if you end up not using it too much, you’ll broaden your overall knowledge of the market by doing so.

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