The 3 5 7 rule works on a simple principle: never risk more than 3% of your trading capital on any single trade; limit your overall exposure to 5% of your capital on all open trades combined; and ensure your winning trades are at least 7% more profitable than your losing trades.
The optimal trading window for intraday traders is typically between 9:30 am to 10:30 am. This timeframe is favored for several reasons. Firstly, excessive hours spent analyzing charts and graphs can lead to mental fatigue and confusion. Secondly, volatility tends to decrease after the initial 90 minutes of trading.
Many traders consider the time frame between 9:30 am to 10:30 am the ideal time to make trades. This is because in the first few hours of the market opening there is usually more volatility and volume which gives more opportunities for the best trades of the day.
The 11 a.m. trading rule is a general guideline used by traders based on historical observations throughout trading history. It stipulates that if there has not been a trend reversal by 11 a.m. EST, the chance that an important reversal will occur becomes smaller during the rest of the trading day.
The best time for trading in India is typically between 10:15 AM & 2:30 PM. This period is considered optimal because the initial market volatility, which occurs during the first hour of trading, usually subsides by 10:15 AM.
Some traders follow something called the "10 a.m. rule." The stock market opens for trading at 9:30 a.m., and there's often a lot of trading between 9:30 a.m. and 10 a.m. Traders that follow the 10 a.m. rule think a stock's price trajectory is relatively set for the day by the end of that half-hour.
While there's certainly money to be made by investing during a down market, this strategy requires additional research and a healthy dose of caution. As a general rule, it's safer to double down and invest when the market as a whole is down instead of trying to snatch up individual stocks that are bottoming out.
Assuming they make ten trades per day and taking into account the success/failure ratio, this hypothetical day trader can anticipate earning approximately $525 and only risking a loss of about $300 each day. This results in a sizeable net gain of $225 per day.
The Rule of 90 is a grim statistic that serves as a sobering reminder of the difficulty of trading. According to this rule, 90% of novice traders will experience significant losses within their first 90 days of trading, ultimately wiping out 90% of their initial capital.
The 70:20:10 rule helps safeguard SIPs by allocating 70% to low-risk, 20% to medium-risk, and 10% to high-risk investments, ensuring stability, balanced growth, and high returns while managing market fluctuations.
You should sell a stock when you are down 7% or 8% from your purchase price. For example, let's say you bought Company A's stock at $100 per share. According to the 7%-8% sell rule, you should sell the shares if the price drops to $93 or $92.
Focus on trading the stocks at the bottom and top of the list, when sorted by Change from Open. These are the stocks with the biggest price moves since the open, both to the upside and downside. Go through some of the ones at the top and bottom of the list, and watch for trade setups.
Then again, 'Mondays are generally busier, with higher volumes of traders and investors, while Fridays are quieter, as is generally well known to happen in the industry according to our trading data', says IG Assistant Portfolio Manager George Bear.
The Best Month to Buy Stocks
Data showing average monthly returns for the S&P 500 between 1950 and 2023 shows that broadly, November, July, April, and October tend to be the best months to buy. Conversely, September and February have tended to see weaker performances than the other months.
Analysts See 13% Upside For Amazon Stock
The 30-year-old Amazon is among the world's most valuable companies. It is a leader in e-commerce spending and in cloud computing through its Amazon Web Services business. It is also quickly growing its advertising business into a challenger to Google (GOOGL) and Meta (META).
Best stocks for beginners with little money include Apple (AAPL), Microsoft (MSFT), Coca-Cola (KO), Procter & Gamble (PG), and the Vanguard S&P 500 ETF (VOO). These options are well-suited because they combine stability, growth potential, and income generation.
So, when you're ready to invest, you want to implement something I call the 10% Risk Rule. And this basically is just limiting your risky investments to no more than 10% of the total money you have invested.
The "11 am rule" refers to a guideline often followed by day traders, suggesting that they should avoid making significant trades during the first hour of trading, particularly until after 11 am Eastern Time.
Under the current T+2 rule, investors have two business days after executing a trade to settle the transaction.
Stock prices fall on Mondays, following a rise on the previous trading day (usually Friday). This timing translates to a recurrent low or negative average return from Friday to Monday in the stock market.
If there is one thing industry professionals have learned in all their years in the financial markets, it is never add to a losing position. That means never “average down” a losing long position or “average up” a losing short position. This is even more important when using leverage.
An entry point is when the prices are optimal for purchasing stock, and an exit point is when the prices are high enough to sell the stock.