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8 Rules For Successful Stock Trading




Upward Money Graph

Stock trading is a lucrative way to earn money while you sleep. Investment in securities is an appreciative use of wealth, and you must put your spare money to good use. The market is strong today, and individual investors are growing day by day. This is a blazing opportunity for anyone who wants to enter the market and earn some profit. However, unlike how it’s projected, the stock market has its dark side, and if you are careless, you can suffer huge losses. 

Therefore, manage your finances prudently and allocate your money to essential things first. Trade only with the bonus money to avoid devastating setbacks. Stock trading and investment require due diligence and extensive market research. Therefore, read this article to know about the eight rules for successful trading if you are new to this.

Make the most of available technology 

In the digital age, technology is man’s best friend, and you must embrace it too. Today, several stock trading apps offer extensive details and an interactive interface to facilitate extensive research and easy trading. 

A prominent trading app would also offer premium features that are (more often than not) paid. Buy these premium features to steer clear of unnecessary ads and focus only on trading and research. Backsetting and live charts are some of the features that will allow you to calculate risk-reward effectively and stay ahead of 90% of the lot. 

Man with a plan always succeeds 

When you visit an online trading platform, you can be overwhelmed by the plethora of information available. This information, marquees and moving charts can tire you instantly, and you will end up investing in the first stock that pops up. This is a newbie mistake, and you can easily avoid it by drafting an action plan and sticking to it. 

Learn about the stock history, future movement, and fix an entry and exit point. Backsetting your plan is also vital because it allows you to dry run your plan on the past performance, and if the plan fits perfectly, there is a high chance it will return good profits.

Keep a business mindset 

If you want to keep your interest in stock trading at a minimum, put your money in mutual funds and forget about it for 2-3 years. However, if you want to learn and grow and do regular business in the market, don’t treat it like a hobby. 

Be professional about it and keep an open eye to learn whatever you can. Calculate all your risks diligently and analyze your returns and taxes thoroughly.

Trading capital is crucial

Trading capital is the initial investment amount or the base capital, which is the nucleus of your trading account. Everything else is either profit or other securities you are holding on to. The profits you earn are over this trading capital. Losing base money will take you out of the game, and you will have to start from scratch. Therefore, avoid unnecessary risks and protect your trading capital.

Learning never stops

Market performance is centered around current events, including national and international news. You must be vigilant about the government policies or any new tax regime changes. The embargos and disinvestments are some of the major market drivers, and they can help you calculate the movement pattern to allow short buying and selling. Experience is the best teacher, and you might lose some amount in the process but stick to your methods and learn at every possible opportunity.

Trading money should be a spare amount 

Nobody can predict exact market movements irrespective of how seasoned they are. There is always a risk factor, however minimal. Therefore, trade with a safe amount that will not affect your financial position even if you lose all of it. Allocate your finances wisely and give preference to the essentials first. Keep the mortgage money, tuition amount, etc., safely, and do not put it into your trading account no matter how lucrative it seems. 

Process is important 

Don’t let your intuitions and emotions get the better of you. Develop a ruthless research methodology that works on crunching data and numbers. Do not fall for empty statements and promises, and stick to your plan. Moreover, do not develop a loyal relationship with any company. Remember that everyone’s in it for pure business and nothing else. Do not hurry into your goal. Stock trading and research analysis is an entirely different ball game, and it requires a different approach and a lot of learning. Do not skip through the process and land yourself in trouble. Take the long hard way and develop a solid research methodology. 

Don’t forget to put stop loss

The stock trading apps are automated to allow efficient short buying and selling. Human reflexes are not fast enough to adapt according to market fluctuations quickly. Therefore, if you have a preset target in your mind, set your cap there. However, you must be mindful of the fact the stock may slide and not recover. In that case, you must calculate the minimum loss that you are willing to bear and set a stop-loss point.



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