The topic I’m writing about today has nothing to do with the current state of the markets, but everything to do with making money in them.

The reality is that there are certain core competencies you must implement if you want to trade profitably with the DoublingStocks newsletter.

Unfortunately, most investors either don’t get it, or worse, simply choose to ignore these fundamentals. Still others understand these rules. And yet, when push comes to shove, they let their emotions get the better of them, which often leads to disastrous results.

I call the following concepts “The DoublingStock’s five golden rules of profitable trading.” Follow these time-tested precepts each and every time you trade and invest, and I think you’ll have the essential framework to make money in any market.

Golden Rule #1: Making money in the markets has almost nothing to do with how often you win — but everything to do with how you manage your risk.

Golden Rule #2: Never risk more than 2% of your account equity on any one investment, trade, or recommendation.

Golden Rule #3: Always use protective stops!

Golden Rule #4: How you exit a trade is as important, if not more important, than how you enter it.

Discipline makes money — discipline in predetermining your risk and putting as much emphasis on when to exit a trade as you do on when to enter a trade.

Golden Rule #5: Ignore the News.

I don’t know one single successful trader or investor who watches any news shows during the day. I myself turn the TV and radio off during the day.

Watch these shows in the evening — unless you have a special analyst you want to see or listen to during the day.

But other than that, when the markets are open, the commentary you find on these shows will more often than not just confuse you, frighten you, or mislead you.

And always keep in mind: News does NOT dictate the major trends in any market or security. To the contrary, news flows FROM the trends!

Think about it: How often has a stock reported better-than-expected earnings, and its share price tanks? Or it announces worse-than-expected earnings, like Citibank did just the other day, and the share price soars?

The same holds true when economic stats are released by Washington like unemployment numbers, CPI, trade deficit numbers, you name it — they are all backward-looking statistics and do not create or change trends.

Rather, the statistics are the result of trends already in motion, and if you follow them, or rely on them to trade, you are virtually guaranteed to lose money.

So what can you rely on? Your own homework on the markets, whether it’s based on fundamental or technical analysis. Or on a newsletter or analyst you trust, and who has proven that he or she not only understands the major trends at work in the markets, but also knows the importance of sound money management concepts.

Best wishes,
Peter Hill & Sandra Toback

PS. When you are ready to start trading, Don’t Miss A Single Newsletter!!

PPS. You might even want to consider paper trading with a program like yahoo finance until you are ready to put some skin in the game.

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