Safeguard Your Account: Essential Steps for Novice Traders

Trading is about taking risks and understanding your risk tolerance.

Risk tolerance is the level of risk you are

willing to accept - this means that you are NOT going to win every trade and you need to be OK with that. Obviously, we want to win as many trades as possible but in reality, we will have losses.

"How can we trade "safer"?

Create a ruleset!

When I started trading, I started developing a list of rules. This helped me tremendously! It basically started with me writing down all the good and bad stuff that happened to me during my trades. Today, I will share some of those rules with you!

1. Do NOT SHORT! As a beginner trader it is not recommended to short a stock, unless you have good reason to believe that a short is going down. Shorts can mean infinite losses, and this could become a bad situation really quick.

2. Limit repositions. In some of my other posts - I actually use repositioning as part of my strategy for buying stocks, however there is a difference between strategically repositioning and just repositioning because your recently purchased stock starts tanking! Many times, new traders will repo to the point where they will not be able to recoup their losses and it could lead to a major over utilization of their accounts.

3. Be Patient! Seriously, this is the biggest rule to follow. I have seen this time and time again. It's like what Warren Buffet says, "the market is a way to transfer money from the impatient to the patient". I can't agree with this statement more. Stocks are constantly going up and down, many people get emotional when it may fall too much and then jump to sell their stock - once that is done - your money is gone!

4. Backtest your strategy! There are many websites out there that will allow you to backtest your strategies. Use them before trading with real money! I know we are in a rush to make the big $$$$ but it really does help fine tune your methods and possibly could prevent losses.

5. Learn to walk away! There are days that the market is very volatile and some days it is truly depressing. My suggestion is to walk away on those days - emotions play a big role in your actions. If you remove yourself from a situation - you will be less likely to make an emotional or bad trade.

There are many other rules you could add to this list, but these are a few that definitely helped me become a better trader. Please remember there is no "safe" trading - trading is super risky and you have to be OK with those risks to be successful as a day trader.

Good luck!