The very best traders and investors tend to share many of the same principles. They are principles that have been proven successful, over a long period of time. Today, I will cover some of these principles, used by top traders, to achieve great success in the stock market.
The first principle is to always put as many factors as possible in your favor, before taking a position in the market. I will not take a position in the stock market, unless the odds are strongly in my favor. I want the technicals and fundamentals to be solid.
Once you become a good trader, diversification becomes something you do not want. Diversification will give you mediocre results at best. If you want to become a great trader, your results must reflect it. Buy only the best stocks at the best possible time. This is achieved by doing proper research and analysis.
Traders tend to like taking profits, but they do not like to take losses. You must be able to let your profits run. In other words, do not sell your winning stock until the weight of the evidence tells you to do so. Keep all losses small. You must do this to preserve your trading capital. You will be preserving your psychological capital as well. Both are very important.
Do not try to pick exact bottoms and tops. You are much better off waiting for a reliable, recurring chart pattern that gives you solid evidence of a trend reversal. Let the market tell you it has changed trends. This is achieved by being in sync with the market. Always go with the flow. Do not fight the market.
These are some of the successful principles used by top traders and investors to achieve superior trading results. Successful trading and investing takes a lot of work and education. Learn from the best. Read their books. Study their strategies, methods, and principles.