Golden rule for trading in stock market
Never over trade and do not make hurry to book profit
If want to invest Rs.1,00,000 for trading in Share Market then trade only Rs. 50,000. Donít over trade Rs. 2,00,000. Donít be hurry for booking profit when market is in positive, wait and watch for right time and then book profit
Choose multiple sectors for trading
Invest your fund in multiple sectors rather than investing all in a single fund. Trade in 3 or 4 Sectors Stock at a time with strict stop loss.
Follow the trend
Do not be afraid to buy at high prices and sell at low prices. Do not buy just because it is a low price & do not sell because it is high. Buy when there is bad news and Sell when there is good news.
Donít; expect to make profit everyday
If you consider you are a smart trader who can make profit on every trade, you are 100% wrong. Always be flexible and accept the fact as soon as you realize that you are on wrong side of the trade. Simply get out of the trade without changing your strategy during the market; it may cause you double losses.
Withdraw some portion of your profit periodically
It is must that trader must take a portion of the profit and put it in separate account. This is absolutely must for long term stability in the market.
Do not trade with unclear mind
NSE & BSE will never close, every morning at 9.00 a.m. (5 days in a week) it will open. So do not try to be a millionaire in a day. It is next to impossible to earn money every day in stock market.
If you will avoid stop loss, next day market will avoid you
Do not average out in our share tips when market is not in favor. Limit your losses by keeping a stop loss order - Never cancel a stop loss order after you have placed it, otherwise you may loose more.
Trade only in stocks having high volume
In low volume stocks the volatility is too high and chance of Stop Loss limit getting failed is too high as there would be no Buyer or seller at your Stop Loss Level.
Sell short as often as you long
Remember that if you are caught in a SHORT SELL POSITION, high chances are that it will give back in less than a month. But if you are caught in a LONG POSITION it takes much more time to build (Sometimes we have to wait for 2- 3 years for our buying prices.) If you consider 10 different reasons affecting the market (NSE & BSE) - on an average, 7 reasons are for bearish trend & only 3 reasons for bullish trend. Hence be cautious in taking a long position.
Do not ever follow rumors
Do not follow rumors. Only follow the trend created by genuine news.
Adjust your daily expenses in a profit
Do not forget expenses like Brokerage, telephone & Mobile bills, Internet charges, computer maintenance, etc. in the profits.