Trading stocks is the kind of challenge that few people not in the trenches every day truly understand. For all that’s been written on the subject, there’s truly only one way to make money — be right — while the list of ways to lose money is endless.
Many of the common mistakes have been covered ad nauseum in countless books and articles. Among the most notable errors you’ll read about are the failure to use stops and not letting winners run.
While these two rules are the most commonly cited in articles on the subject, there also is another set of lesser-known but equally important rules that I’ve developed in years spent trading stocks and options. Used over time, these rules can help prevent unnecessary losses: