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Charts are only useful to those who have the patience to wait, the knowledge to choose and the wisdom to strategize.  Most people, especially beginners, do not have the patience to wait. They must buy and sell, just to be in action. This may be good for their brokers but is not good for their bank accounts.

A smart trader will not buy if he does not see a buy signal. Likewise, he will not sell until he sees a sell signal. It is during the base formation that you must make your plan. Wait and watch for a buy signal before you buy.

If you do not have the patience to wait and the discipline to implement your plans, charts are useless to you.

To succeed in the stock market, you must know who you are temperamentally. Can you take a loss? Can you "cut your fingers" and bear the pain? If you can’t, stock trading is probably not for you. The first loss is the best loss. Never compound your error by averaging down, especially when your first purchase is at extremely high level.

No one has the ability to win all the time. Winning and losing are part of the game. You can’t make cakes without breaking eggs. If you want to win, be prepared to lose. The important thing is to keep your losses small. Not only must you know how to use a stop-loss. You must know how to use a trailing stop-loss to lock in your profits.

The beauty of the stock market is that you can either invest or speculate or do a combination of both. For me I am more of an investor than a trader. Most of my funds are tied up with small-cap sound solid companies. I call them baby blue chips. These companies will appreciate the most over time.

This is an important figure to look at. It will give you an idea as to whether a stock is cheap or expensive.

 PSR is calculated by dividing the share price by the annual sales per share. The lower the figure is the better. This, of course, must not be taken in isolation to determine whether the stock is worth buying or not. Its usefulness is to compare the valuation of companies within the same industry.

 As a rule of thumb, companies with a PSR of less than one are considered cheap. Sales are also known as revenue or turnover.

 When the earnings per share increase, sales must increase as well. If they do not, there must be a reason. It is important you know why, to have a better understanding of what is happening.

After you have bought a stock and its share price drops, you buy more at a lower price. This brings the average price per share down. This is called averaging down. The exact opposite is averaging up.

Most people like to average down. Is this a good strategy? It all depends on who you are financially and your personal traits. If you are a value investor, that is, an investor who buys sound solid companies at undervalued prices for the long term, you should certainly average down. Buy low and sell high is your way.

But, if you are a speculator or trader, your strategy would be to buy high and sell higher. Your tactic is to ride with the waves. You don’t want to wait. So you have to time your purchases. That means you wait for the stock to move first before you buy.

A trend can reverse direction at any time. As soon as you buy, the price drops. Your positive expectancy vanished. In this case, you must quickly sell to keep your losses small. Don’t compound your error by averaging down. If you are right, you can average up.

There is no way you can win all the time. The important thing is not to get the best of cards but in knowing when to leave the table. In other words, you must know where to correctly place your stop-loss. That’s the difficult part of the problem.

To win, keep you losses small and profits big.