10 Rules for Trading

No image Nutan Gupta

Last Updated: 12th December 2022 - 12:04 am

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There is no dearth of information on trading in the stock market either on the internet or in newspaper columns. However, there are some golden rules which every experienced investor follows. These are:

Having a Trading Plan:

Like with everything else, having a plan is important. Without it, an investor may invest in trades that have little chance of salvaging the invested money, let alone making profits for the investor. Therefore, an investor needs to have a plan as to the sectors which he will prioritise for investing, the amount of money that he will invest and also the time for which he will invest. With a wide range of websites offering platforms to trade in the stock market, investors need not look anywhere else.

Tracking current events that affect markets:

A smart investor always keeps track of the political atmosphere in the country because it mostly affects the stock market. A welcoming policy from the government might send markets into a bullish run while an unpopular move can send the markets into a tizzy. A wise investor reads the pulse of the market before going ahead.

Not keeping all eggs in one basket:

This is a classic advice given to all new traders. It is to prevent investors from a situation where they don’t have money to take advantage of the ever-rising opportunities in the share bazaar.

Unable To Track:

Baseless trading hardly yields any results to profit the investor. A prudent investor keeps track of all market trends and buys and sells according to them.

Using Technology:

Investors in the information age have a bulk of data at their disposal. If they use it according to their needs, it can work to the best of their interests. Various trading websites have a huge trove of data ready to use.

Learning from other investors:

It is always important for new investors to follow the leading traders and learn how they go about their business. This can also be done by reading books, articles and news reports. Because trading can be very risky, you need to know as much as you can. The only way to do that is by research.

Don’t try to play the market:

Gaining mastery over the rhythms of the stock market requires a lot of time and effort. Therefore, it is wise to never try to time the market. Share markets have their own way of working themselves out. Hence, one who tries to play the market is rarely successful.

Not being put off by initial losses:

Investors, in the beginning, may be put off by losses but it needs to be understood that trading in stock markets require time, patience and effort to benefit from. Therefore, initial losses should be treated as stepping stones to larger profits.

Don’t over-trade:

So many of investors get caught up in over-trading thinking the moves they make are proportional to their potential benefits. However, this is unfortunate as traders should be disciplined enough to understand what is the right time to make a move.

There is no golden rule:

No wand will be able to wave all your problems in the stock market. There are only tools, skills and instruments that can be applied to your maximum advantage. All moves in the market must always be based on this knowledge.

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