20 Rules for successful Trading
When you start doing trading, few things are required at upmost in order to get profit. Trading Calls and Set-up are not everything. Discipline, Trading Rules and Money management is equally important indeed more in order to get profit from trade. Do you know 93% traders only lose money month by month while trading in stock market? Reason only 1, lack of rules. Many traders think stock market is easiest way to earn money. Indeed, its easiest way to lose money. By Implementing these principles and rules your chances of earning will increase. Here are 20 rules to get you started towards becoming a successful stock market trader.
1. Intraday Trading is High Risk – High Gain. Intraday trading is more about speculation rather than technical and fundamental. Scrip can even fall 10% in a day, but what really matters where it closes. So even bullish stock can gives losses in intraday. Nobody can create wealth doing Intraday Trading. So intraday trading should be part of trading not core of trading. One should Diversify in various trading like intraday trading, swing trading (2-5 days) and positional trading (6-30 days trading).
2. Never, under any Situation add to a losing position. Reverse averaging always leads to more loses. If you bought something and its down. Better Continue to hold without any average.
3. Never buy or Sell just because the price is high or low. Predicting tops and bottoms are like guessing future actions which is nearly impossible. There is no limit for Upside and downside. Always buy when scrip started moving up and vice-verse. Money is never made in buying high or low. It’s made in buying and selling at trend reversal.
4. Always cut your losses quickly. If boat is sinking, don’t pray to god. Just Jump. Always accept your mistake and exit the trade. In a Same Way, Always Hold your winning positions with trailing Stop losses. Scrip’s always moves beyond expectations. So Cutting Losses quickly and let your profit run mostly works.
5. Don’t get nervous by Losses. Losses are part of trading. No one can earn all the time. What really matter is earning more than losses. Even 60%-70% Success makes overall profit.
6. Only trade with what you can lose. Never trade with borrowed capital, only trade with funds you can afford to risk. Divide your capital into few equal parts; never risk more than one part of your capital on any one specific trade.
7. Trend is the most important thing. If trend is not clear, avoid trading. Sometime no Trade is better than trying your luck and loose at the end.
8. Never change your trade until and unless one has valid and concrete reason to do so. If you think your strategy is good, then you should continue to hold your positions. Changing the strategy all the time, makes all trade in vain.
9. Never blame the market. Market is always right. If your prediction and analysis was not correct. It’s not the market fault. Learn from mistake and improve trading strategy. Improving all the time what makes a successful trader.
10. Always remember, there is no trick and tips to earn easy money. Only In-depth Knowledge and experience works. Investing software and trading books by themselves can't make you enormously wealthy. Nothing is 100%. Follow some strategy & Do analysis and make a profitable trade is only possibility.
11. Don’t follow news. There are some big fat cats who get the news ahead of you. Most of the news already priced in. Always Check the chart to know whether the news has already been discounted or not.
12. Trend is trader’s best friend. Never trade against it. If overall trend is bullish, buy on decline and if bearish sell on high.
13. No Risk, No Gain. If you are not in a position to accept losses, either psychologically or financially, you have no business trading. In addition, trading should be done only with surplus funds that are not vital to daily expenses.
14. Avoid Margin Trading. Margin looks lucrative and profitable. In reality, they are not. Profit might be in multiple. But they will be less due to time limitations and emotional desire to book early due to leverage positions. Loses will be too many and that also in multiple.
15. Don’t trade for the sake of trading. Trading for addiction always leads to misery. Trading is a business which should be proper analyzed before implementations.
16. Always trade in liquid stocks. It’s easy to buy, but what really important is to exit in any case. Low liquidity does face different bidding prices as well as Circuits which makes difficult to exit when we really want to exit in worst case scenario.
17. Always reduce your trade after first lose. After lose mostly people get unbalanced psychologically which leads to more failure. Observe mistakes, learn and trade second one with lesser quantity. Once confidence is build, you can come with normal quantity.
18. Use Stop losses. It’s must. When boat is sinking, don’t pray to god. Just jump. Stop loss is must to protect your capital. If you have capital, you can surely recover later. But if you losses big, it’s nearly impossible to recover.
19. Never follow anyone’s advice until and unless that very person knows more than you. Everyone has different way to look the market so the trading style. Develop, Follow and Create wealth. Use systematically approach.
20. Make sure you follow your rules.
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