Trading in the stock market can let you earn huge returns when done by using the right strategies. It is important to note that success in trading happens through discipline. If you make the right calls that don’t mean that your trading pattern is the ideal one.
To be a successful trader, you need to invest your time in searching for the right and successful trading strategies. New traders always make the mistake of being in a hurry to earn a huge amount through trading. Well in almost every case like this, traders need to face heavy losses.
To ignore such a situation and for successful trading, you need to gain more knowledge about the stock market. This blog will explain to you the top 10 rules for successful trading. So, stay connected and read out the information given below carefully.
Top rules and successful trading tips
To get success in trading you need to treat trading like a business and not like a hobby. Staying attentive and regular learning is the basic principles of successful trading. Start with learning and setting realistic goals. To educate you more, we are sharing the top rules for successful trading which are as follow:
Rule 1: Protect your capital first
People often make the mistake of investing all that they had in their hands. Well, this will let you face heavy losses and can leave you empty-handed too. It is important for you to calculate how much capital you are willing to lose. To survive and stay consistent in the stock market, you need to ensure that your capital is protected. Monitor the trade on the basis of the risk involved in your capital.
Rule 2: Never trade without a stop loss
It is important to learn about putting the stop loss in the right position. Many experts advise this to the new and current traders that always trade with a stop loss. It is one of the major successful trading algorithms. Technical analysis will help you to understand the right place of putting a stop loss. You can also put it according to the loss you can afford. Always trade with an in-built stop-loss whether you are trading on the short side or on the long side.
Rule 3: Profit is what is booked
It is the thumb rule for the traders that profit is what gets booked and the rest is book profits. It is important to get your profit withdrawal from the market at regular intervals. Traders are not asked to play the hold game and are hence advised to take profits off the table as it helps to increase your trading capital.
Rule 4: Follow the trend
Moving according to the trend or momentum will help you to earn maximum profit and to make more money. Traders who try to short a bull market often face failure. Design your trading strategy in such a way that it will match the current or ongoing momentum.
Rule 5: Utilise the benefits of technology
Trading in the stock market is linked with many uncertainties. It is important to utilise the technology to understand the overall situation of the stock market through technical charts and patterns. Many charting platforms help traders to analyse and view the stock market according to different aspects.
Rule 6: Leverage in a volatile market can be dangerous
Also, make sure that you will not pick the way of leverage in a volatile market. It is good to work with leverage in a normal market situation, but this can destroy your trading plan when done in a volatile market. This can hit your trades big time in a volatile market. Try to avoid leverage in a volatile stock market to avoid losses.
Rule 7: Sit back and relax when no move is needed
Well, sitting on a perfect couch and waiting for the right moment is also a trading strategy. Trading is not all about continuous buying and selling of stocks in the market. To do nothing can also work wonders as the successful trading patterns. In a situation when you can’t hit either way and the market is confusing you, it will be beneficial to do nothing.
Rule 8: Don’t stay dependent on the trading tips
Totally staying dependent on the trading tips which you receive from many platforms, can let you face losses. You have to be your master. Try to talk to your broker and make decisions according to what you found right. Investigate and listen to the tips given by expert’s analysts, but make an ultimate decision by yourself.
Rule 9: Do not neglect the costs
You don’t only pay the brokerage as a cost for trading in the stock market. For traders, cost matters a lot. Besides brokerage, there are many statutory charges which include stamp duty, STT, GST, exchange fees, turnover taxes etc. You also need to pay further costs when you need to take delivery of shares. Project your trading profit by considering these costs.
Rule 10: Learn when to stop trading
An ineffective trader or an ineffective trading plan can be the reasons to stop trading. It is necessary to know about successful trading systems, but it is also important to understand that when you need to stop trading. An ineffective trading plan can be changed or corrected. But in the case of an ineffective trader, one doesn’t perform according to what is planned and this approach is the phase of a trading pause. Take your time to learn from your mistakes and take a break from trading as and when needed.
Know the right trading tips at Chart Analysis
At Chart Analysis, we advise you to set realistic goals which are possible to fulfil. Our courses will help you to know your strengths and weaknesses even before you take a step in trading or investing in the stock market. Here you will also find the relevant information on the stock market which will help you to gain more knowledge and to understand all the dimensions of the stock market.
Study and understand the above-mentioned trading tips to make an effective trading plan. This is surely going to help you to establish a viable trading business. With proper discipline and patience, you can easily approach the goals for which you have started trading. So, don’t stop researching and stay tuned with us for more. Happy trading!
Frequently Asked Questions
You will be a successful trader when you get to know which strategy will work best according to the market conditions. Successful traders never rest to do more and more research to find out when they should use their strategy and when not.
To enhance the trading skills you need to learn, practice, and get help. It is important for you to start reading trading journals, books, and news. Purchasing trading software and listening to the experts every day can also help you to enhance your knowledge of stock market trading.
By adopting the right strategy you can get success in your trading plan. It is important to set the trading capital aside, set aside proper time, start on a smaller scale, avoid penny stocks, be realistic about profits, and stick to the plan. By learning from your mistakes and by staying ready to gain knowledge you can get higher returns through trading in the stock market.
Yes, it is possible but you need to follow the basic rules. Use a proper trading plan always, do trading like a business, use technology, study the markets, protect your trading capital, take risks on the capital you are ready to lose, follow the trading methodology, and do not trade without a stop loss.
Many aspects work as the key reasons for trading failure. This includes lack of knowledge, implementation of strong money management rules, not using stop loss etc.