Charles Schwab today released a list of tips to help self-directed investors better manage their approach to trading as people return to the market amidst increased trading volumes. 

“With investors expressing renewed faith in the market, Charles Schwab remains dedicated to providing traders with education and basic guidelines to improve their trading strategies,” noted Kelli Keough, vice president, Schwab Investor Services. “These tips will help traders to better manage risk while taking advantage of more sophisticated investing tactics, especially after their experiences this past year.” 

• Stick to a trading plan. Identify at the outset why you are entering or exiting a trade. Having a trading plan can help curb your emotions and keep you on course—if you stick to it. Diversification and a proper asset allocation plan are critical to success in any market environment: don’t allow your portfolio to become over-concentrated due to market appreciation. 
• Be mindful of the size of your positions. Taking on a position larger than you are comfortable with, in order to try to maximize gains, also increases your risk. Consider scaling in and out of positions when you feel the market may be reaching a high or low point. 
• Consider using limit orders. Identify an execution price and set limit orders to help minimize risk associated with market swings. Remember that although a limit order allows you to specify a price, there is no guarantee of an execution, even if the market moves and reaches your limit price. 
• Trade the trend. The trend can be your friend. Trying to pick tops and bottoms seldom works to your advantage. It is often better to enter or exit a position a little late than to be completely on the wrong side of the trade. 
• Consider ETFs rather than individual stocks. Exchange-traded funds (ETFs) can be a good way to gain exposure to sector or industry trends without buying individual stocks. ETFs allow you to participate in areas of the market while helping reduce the company-specific risks associated with buying individual stocks. 
• Set conditional orders (such as stop orders) consider volatility vs. price. Define profit and loss targets and set stop orders or bracket orders when you place your trade. Consider using stop orders by looking at the trading range, or volatility of the stock. But remember there is no guarantee that a stop order will be executed at or near the stop price. 
• Use extra caution when trading on margin. Leverage is a double-edged sword. When things are good, you tend to forget the downside of leverage; if things go bad, you can lose everything (and then some). 
• Procrastination seldom pays off. The cost of waiting for the perfect moment to invest often exceeds the benefit of even perfect timing. Since trying to pick tops and bottoms seldom works to your advantage, the best strategy for most investors is not to market-time at all. Instead, make a plan and invest according to it. 

Source: BusinessWire