The stock world provides various opportunities for your money to grow. You can trade or invest in the market as per your wish and need. Online trading helps you trade at ease and your convenience. You need not meet the broker to place your trades as you can trade all by yourself through online trading platforms. With mobile trading apps, it is easy to place orders anytime from any part of the world. There are people who carry out intraday trading which means buying and selling the shares within a day itself. If you do not buy or sell shares, your position will be squared off automatically by the broker. Let us know about the golden rules of investing in stock markets.
« Golden Rules for Trading and Investing »
- Golden Rules No 1 Follow your rules.
- Golden Rules No 2 Don’t forget rule number 1.
- Golden Rules No 3 Always trades with a stop loss, define it before you enter a trade.
- Golden Rules No 4 Always decide your profit booking method in advance, greed may come in between.
- Golden Rules No 5 Do not count on your money when the trade is open.
- Do not overtrade; trading a position which is bigger than your portfolio size in excitement can be a big risk.
- Choose to stay in market only when required, choosing a strategy that keeps you in market only 50-60% of times helps you avoid price shocks.
- Cutting a big amount of risk with a nominal cut in profitability is a good tradeoff.
- Trade a position which has reward: risk ratio at least 1 :1 or greater.
- Do not trade illiquid stocks, which cannot fulfill your order when required (low volume stocks)
- Do not over leverage your positions; with extra reward it brings extra risk.
- Set your daily, weekly, monthly, yearly targets and so on for risk as well as reward.
- Do not trade on a day with holiday type volumes.
- Make your trading boring; if it is interesting there is some flaw.
- Trading is a Business! Plan well in advance all the requirements and rules before your execute.
- Maintain a trading journal, paper trade after a loss.