To trade stocks profitably requires having a rational mind. This means that the individual does not get emotionally attached to their stock holdings. If the stock trade does not materialize as expected, these individuals will quickly divest the position to minimize losses. The money will then redeployed for more profitable stock transactions. The trader is successful due to the fact that they focus on maximizing profits and keeping losses to a minimum. Their goal is about coming out ahead.

Important for any successful trading is having a risk management system. Before going ahead with any equity trade, the individual knows what their downside risk is. Limiting one's potential losses is more important than the potential upside. The best traders are those that consistently minimize their downside risk. In addition to knowing when to buy, it is just as important to know when to sell. Profits are lost and losses magnified because the investor held on to the stocks too long.

Vital to profitable equity trading is finding the right stock to trade. The best trading stocks are very liquid, meaning volume is high enough in that buy and sell orders are easily filled. Furthermore, these stocks have good price action. The stock price movement is quite volatile, giving the investor plenty of opportunities to profit from the price movements. These stocks also tend to have a clearly identifiable trading pattern. Active equity traders tend to use technical analysis, the study of a security's past trading activity, to establish entry and exit points for the stock.