Stock investment is an incredible source of making quick income, but the high income does not come without high risks of losses. The good news, however, is that these risks can be minimized and even eliminated if some time tested sure fire steps for trading in stocks are followed.

The first and the most important step is to use age-old common sense of buying low and selling high. Although it is the most elementary principle of trading, yet few stock investors follow it consistently. On the contrary people do exactly the opposite and suffer losses. Most investors jump on to buying a stock as its price is shooting up. As it happens in most cases, the price falls the moment they buy and continues to fall further to their great bewilderment till they lose their heart and sell out the rest of the stock presumably to prevent further losses. Therefore the secret of making profits is determined 100% by the time of your entry into the stock market. Buy a good stock when its price is low and wait patiently for it to rise.

An intelligent investor must understand that every ‘rise hath a fall’ and its opposite is equally true as well. So if the price of your stock is rising, do not wait for it to touch the sky before you sell it. Instead sell it off when you have earned a reasonable amount of profit margin over your investment. Unpredictability of stock market has become a proven fact over the time and no amount of punditry can tell you what will happen the next day. Stock prices are gossamer sensitive and even a small happening can shake the stock prices.

On the other hand if a good value stock is lying low, buy it and wait patiently for its price to rise. It is bound to rise. Remember the more extreme is the rise and fall, the more extreme is the movement in the opposite direction. This exemplifies the saying that the trend always changes the rule.

Do not waste your time looking for ‘reasons’ why the stocks or markets make large directional moves. You will never find one for certain. You are dealing with perception of stock markets, not the reality. Do not make the mistake of assuming that the stock market moves on rational basis. The only important thing to know is that the stock market is moving and not why it is moving. Stock market winners only note the direction of the movement of the stock market and its duration while the market losers just waste their time in reasoning out why it is moving.

It must be remembered that the stock markets move in advance of news or supportive fundamentals, quite often months in advance. So do not wait to invest till you find why a stock is moving. You need to be prepared and positioned before the largest directional movement takes place. Understanding the market trend is the basis of making profit. You need long-term trend to make substantial money. The key is to get aboard a trend and stick to it for a long term to maximize your profits. The golden rule is that the trend is your best friend.

Cultivating trading discipline in stock market trading is essential to make profits in such a way that they cut down your losses quickly. You have to develop a highly disciplined trading system to make money over a long time.

The value of traditional technical and fundamental analysis cannot be underestimated in making the money consistently in the stock market. Equally important is the market timing of your trades, which can be learnt through experience and intuition.

If you want to make good profits consistently over a long time, you must keep yourself informed about the latest market movements and act upon your information before others take the wind out of it.

Be wary of the advice, ideas, tips and tricks of the trading software vendors, stock trading system sellers, market gurus and commentators, neighbors, friends’ friends, financial analysts, newsletter publishers, trading authors and so on unless you become sure that these advice peddlers have traded with their own money and done so successfully for years. It must be noted that the real successful traders are very few in number. Remember that the Wall Street and other financial firms make money by selling you ideas. They do not instill trading wisdom in you. You have to take your own trading decisions based upon your own study and experience.