All too often, beginning, intermediate and, yes, even some advanced traders fail to follow even the most basic trading guidelines. And this could cause you to miss out on big gains. So we have some essential trading tips that are both straightforward and easy to implement.

Here are six trading tips every investor should follow:

1. Diversify Your Trading Capital Allocation

We’ve all heard the old adage “don’t put all your eggs in one basket.” This homespun pearl of wisdom is especially applicable to a successful trading plan. For example, if you have a huge percentage of your total trading capital allocated to just one or two stocks, options, etc., then if one or both of those positions falls, your entire trading account is compromised.

If, however, you have at least four or more holdings in your trading portfolio at any given time — and if those holdings each contain an equal percentage of trading capital — then any decline in one or two stocks can easily be absorbed.

2. Set a Price Target Before You Enter the Trade

Whenever you enter a trade, you are usually expecting that your stock or option position will rise. But how much of a rise are you expecting, and what kind of gain are you prepared to take? These are questions only you can answer for yourself, but a general rule is not to get too greedy.

If you set a price target in the neighborhood of 8%-10% above your initial buy price, and your position then hits that target, you can either sell the position and bank profits, or you can take at least some of your gains off the table and let the rest ride. Whatever you do, don’t set unrealistically high price targets. If your expectations are too high, you’ll find yourself disappointed with even very good gains.

3. Set a Stop Loss on Every Trade

The flipside of setting price targets is setting stop losses. By placing a stop loss on all of your trading positions, you will ensure that you never take a big loss in any one position. Like price targets, the exact point at which you place your stop losses is a question only you can answer, but a good rule of thumb is to never let a position fall more than about 5%-10% before you sell.

Think of it this way — when you entered that position, were you expecting it to go down? The answer is most likely going to be no, so really all a stop loss does is protect you from those decisions that you didn’t get right.

4. Never, Ever, Chase a Loser

Another rule that goes hand in hand with setting stop losses is to never, ever, chase a loser. This serious mistake can be a real killer for traders, as it locks up the capital originally invested in the position and then locks up more capital as that position is purchased on the way down.

The simple fact here is that the sooner you cut a loss, the sooner you can make up the loss. If you pour more money into a losing position, then you’ll likely remain in the hole for an extended period — and that’s definitely no way to administer a successful trading plan.

5. Know Your Trading Costs

Trading is a business, and as such, it should be treated like one. One of the first steps you should take whenever you place a trade is to know what your trading costs are so that you can add that figure into the total cost of each position you take. For example, if you buy 100 shares of a $10 stock and it costs you $9.99 per trade, your cost in total to trade that stock will be 0.199 cents per share.

By knowing your trading costs, and then by factoring those costs in to your calculations on stop losses and price targets, you’ll be better equipped to know your actual, real-world profit and loss.

6. Stick to Your Strategy

There are all kinds of trading strategies out there. Some are very aggressive, swinging for the fences on every trade, while other more conservative strategies try to hit singles and doubles on a consistent basis. Both kinds of strategies can be successful, and there are many styles of trading that can work. However, one thing that usually doesn’t work is to begin trading with a certain strategy, and then abandon the principles of that strategy too early. Here another old adage comes to mind, and that is “don’t change horses in midstream.”

If you’re trading according to a specific strategy, at least follow that strategy’s tenets all the way. Doing so will allow you to objectively assess whether that particular approach is right for you.

This article originally appeared on Traders Reserve. For more trades, ideas and strategies, visit Traders Reserve.