Remember that trading or investing is not a game just for playing. Some of the important rules which I have learnt from my more than 15 years of trading in stocks and commodity markets. -Never venture into stock markets without a proper plan. You should know the money you are ready to invest, the risk you are going to take and know your expectations. Have a clear plan, as one wrong move in stock markets can take all your money away from you. -Keep a notebook with you to note the amount you are losing and winning in trades. Never overtrade and trade only in limited quantity. Learn from the losses you make in trading. One important thing you learn from trading is patience. Failures are the stepping stones to success. -A hard reality of stock trading is that good trader of today had been a loser in stock trading at one time. -If you do not overtrade, you will never lose your temper. Losing patience and overtrading go hand in hand -Don't put all your eggs in one basket means i.e., do not put all your money in stock markets at one go. Put a part of it only. -Do not give big losses and take small profits. It should be big profits and small losses. -Try and judge the effect of news. It is generally seen that good news bring the market down and bad news take the markets up. Treat market to be supreme and do not think that market will go as per your wishes. You will have to go as per the wishes of the market. -Do not fall in love with any particular stock. It has been seen that if a person has lost in a particular stock, then that person wants to earn from that stock only. -Treat stock market trading as a business and not a do or die act. -Do not try to buy stocks at the bottom and sell at the top, be prepared to buy stocks at the top, and sell at low. There is no end to a top and no end to a fall also. We believe that if one is trading with the trend, then only one will earn. - It has been seen that investors go to the stock exchange terminal or their brokers office with a view that they want to sell a particular stock but the investors sitting there convince him to rather buy that stock. Investor should not be influenced by judgment or opinion of others. Investors must believe in themselves and do their own home work, after all it is their money at stake. - Know your limits in trading i.e. you should know the maximum loss you are ready to give. A trader or an investor who does not care for the stop loss will ultimately lose all his money and then a stage will come where he will only blame his luck. So a clear cut stoploss is a must before buying or shorting. -Do not enter the stock market just because you want to play something. Remember it is not a toy. Wait for the clear opportunity to enter. -Beginners must not do intraday trading. -Trading is like a war, always have a set of rules which you are going to follow before venturing into trading. Do not sing praises of your winning trades. -Do not try to earn all profits in starting. Have realistic expectation and know it clearly that Rome is not built in a day. -Remember that even the best of traders are still learning, so one can never be a master of trading. It is an ever learning process. After 15 years of education a person become a graduate and you expect to be a master of trading in just an year. Impossible. -Risk Management is another important thing in trading. Test the waters before swimming in deep. Do not worry if good opportunity has gone by today, it will again come up tomorrow but if you think today is the end of world, it might really be. - Cut your loss before booking your profits. If in one stock you are having loss and in the other profit, then cut the one which is giving you loss before booking your profits. ---Never borrow money for trading. Trade with money which you can spare to lose. -Do not let success go to your head. It has been seen that the best of traders who earned for years lost everything once they became over confident. |
