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Three prevalent myths exist about the stock market: 1) the only way to make money in the market is to be a long-term investor; 2) To win at investing, you must master all the facts and figures; and 3) you always need to be right.

Successful traders know differently: 1) they understand short-term investing can lead to large profits; 2) They understand the psychology of investing much more than the facts and figures; and 3) they understand being rich is more important than being right.

The following tips can help you become a successful share trader:

TIP #1: HAVE A PLAN

Outperforming the market and protecting your money in an easy to implement manner forms the foundation of a successful trading plan. Formulating the plan involves three key questions: Do I invest now or wait? In what should I invest? How do I know when it's time to get out? Before investing one dollar in the market, be able to answer these three questions, for they provide the foundation of a successful trading strategy.

Tip #2: THE TRADE EXIT IS MORE IMPORTANT THAN THE TRADE ENTRY.

You make a solid stock purchase. It rises. It rises some more. You feel invincible. Greed kicks in. You call your travel agent and start planning your Tahiti vacation. Your stock plummets.

Anytime your stock is rising, get a balloon, blow it up, let it go, watch it rise, run out of air, and plummet to the earth. That balloon could be your stock. It is important to plan your exit strategy, not before the stock plummets, but before it rises. Doing so prevents greed fueled decisions on the way up, and fear based decisions on the way down.

Tip #3 LET PSYCHOLOGY WORK FOR YOU

Easy in theory, but difficult in practice, buying low and selling high requires measuring the psychological investing tides via the Universal Emotional Roller Coaster: Most investors begin with optimism, followed by greed, thrill, and euphoria. When euphoria strikes, it's time to get out, but most, feeling euphoric, stick around for the ride. As the Roller Coaster goes down, the emotional investor feels anxiety, denial, fear, depression, panic, desperation, and capitulation as the stock bottoms out, followed by an irrational sell off, accompanied by relief.

At this point, smart investors buy.

Tip #4: DON'T RELY ON YOUR OWN INTELLIGENCE

Large investors, like elephants, leave footprints. Find out what they're doing and learn to read them. Don't be afraid to ride the waves they create. When something doesn't happen that should, find out why. Even the best traders don't win all the time. They find out what went wrong and adjust accordingly. Often the analysis was correct, but the result was wrong; other times poor analysis was the culprit and adjustments must be made.

Tip # 5: MASTER YOURSELF

The market is a reflection of your life. If you master yourself, you can master the markets. Find out who you are before trading. If you're not sure who you are, the market is a very expensive place to find out. Identifying weaknesses and strengths before trading will allow you to act without emotion. Acting without emotion gives you an advantage over the masses who consistently act out of fear and greed.

Tip #6: CHOOSE THE RIGHT STRATEGY

Financial advisers tout investment diversity. I tout investment method diversity. Effective strategies in a bull market will lead to disaster in a bear market. Effective strategies in either will lead to stagnation in a level market. Strategies for all types of markets exist. It behooves the stock trader to know these strategies and when to implement them.

Learn more about this author, Trent Lorcher.
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