In trading people have to understand the trading rules while trade in stock market.
In stock market 50 million traders are trading but many of people did not know about the best rules which they have to know.
We are doing the research on trading rules and finance sector we find the Golden rules for stock market trading.
From this article traders can improve there trading strategies and they can increase there knowledge Trading is a popular way to invest and make money in the financial markets. Whether you’re new to trading or a seasoned pro, there are certain golden rules you should follow to help ensure your success. In this article, we’ll discuss some of the most important golden rules of trading. and grow them money.
Introduction Of Trading Rules:-
Trading in stocks, Forex, commodity or any other financial asset need good knowledge and experience to survive and grow capital consistently.
Before starting to trade, one needs to understand and gain knowledge of at least technical analysis.
A professional or a successful trader is the one who knows the entry and exit point for any trade and follows proper discipline and risk management.
Beginners can become successful in trading by following these Golden Rules of Trading.
About the trading rules:-
Have a plan:-
One of the most important golden rules of trading is to have a plan. This means having a clear idea of what you want to achieve and how you’re going to achieve it. Your plan should include your goals, your trading strategy, and your risk management plan.
The analysis and stock selection should always be done when markets are closed. The advantage of doing analysis post market is, there is no distraction of price movement, no noise and it helps a trader in improving focus in right direction.
This habit will improve your analysis and will help you to take decision accurately and quickly. The trade plan and stocks should be ready before market opens and one must strictly trade as per the trading plan.
Protect your Capital:–
This is the most important principle in trading. Your cannot be in the game if you do not have capital to trade. Invest your capital wisely and smartly. Always keep a measure of risk you are taking in very trade.
Be it stock market or any other financial market, first it is important to protect your trading capital and then grow it steadily.
Respect Risk & Manage It:-
To be a successful trader, risk management is most important step to focus on. Before taking a position, always define the amount of risk you are willing to accept with each trade. Every trader must follow the practice of placing the stop loss order in system as soon as a trade is initiated. This ensures that you don’t suffer a big loss in any trade.
I have come across many traders whose analysis is good but they still fail to attract steady growth. This is mainly because of lack of risk management skills.
Have Realistic Mindset:-
Many people think that trading is very easy and stock market is like a money making machine. One can become rich overnight and gain handsome return easily. However this is not the case, trading requires lot of patience, discipline and a good amount of knowledge and experience is required to survive.
During the initial stage, first priority of any trader should be to save trading capital while trying to make small gains trading in small quantities over a period of After gaining experience and good results in trading, one can look to increases position size with time. appropriate risk appetite.
Many new traders thinks to become rich quickly and over trade which often leads to wiping out their entire trading capital, so this should be avoided and having realistic mindset is very important in case of trading.
Treat Trading as a Business and not as a Hobby:-
Many traders feel that trading is an exciting and adventurous thing to do which is not the right approach. To be successful in trading, one must think of it as a part time or full time business and not as any hobby or time pass activity.
If trading is approached as a business then it will automatically increase your commitment level towards it. This will lead to increased learning and better results.
Avoid Using Trading Tips from Others:-
To become successful in long run, one should avoid trading on tips given by market gurus, friends or anyone else.
This kind of short cut in trading often results in trading losses for traders.To become a successful trader, one must do his own homework before trading on anyone’s tips or calls. That’s not all; one must always trade as per their trading style and follow their own trading plan with proper entry and exit point.
Don’t let a Winner become a Loser:-
While trading in stock market or any other financial market, exiting a position at correct time is equally important as entering it.
One must avoid being greedy and must take the money off the table at appropriate point or ride the gains with trailing their stop losses.
As a trader it is important to understand that financial markets will exist for ever and will keep on providing endless trading opportunities. So we should always develop a habit of booking profits.
Master Few Strategies:-
It is a bad idea to keep on switching from one trading strategy to another. It is important to follow one strategy and master in it rather than becoming jack of all.
Successful traders always try to master a trading strategy following it relentlessly and experimenting on it from all angles rather than jumping from one strategy to another just because few trades delivered losses.Be it stock market or any other financial market, in case of trading, there exist no HOLYGRAIL strategy which will provide 100% successful results. Hence if anyone promises or claims to have 100% profitable system, it is always a good idea to ignore that gimmick.
One should always try to master 2 or 3 trading strategies which suits ones trading style and invest more time and money to gain experience in them and avoid being jack of all but master of none.
Always Maintain a Trading Journal:-
A serious trader must always maintain a trading journal which helps to check performance matrix, track progress as well as study mistakes made while entering or exiting a trade.
A trading journal mainly includes entry and exit date and time and rates. It also includes details like trade outcome, trading thesis and market related points like overall market sentiment, any special event, etc.
Trading journal provides valuable information on trading performance like which strategy is more profitable in which market condition, helps to assess risk management and position sizing, etc.
At the end of each week and month, a trader must go back and see what kind of trading he did, notice common problems and spot strengths and weaknesses.
These observations can help a trader to exploit his strengths and highlight the areas which he needs to work on.
The list of these trading rules can go long. Here I have tried to mention most important ones which if one follows in trading then big losses can be avoided and one can consistently perform well in trading any financial market.
One should always remember, trading is hard work and demands a definite strategy or process, discipline, patience and some rules which one needs to follow always.
Take precaution about the trading:-
- Be patient
Trading requires patience. You need to be patient when waiting for the right opportunity to present itself and when waiting for your trades to play out. Don’t rush into trades or panic when things don’t go as planned.
- Keep your emotions in check
Emotions can be your worst enemy when trading. Fear and greed can lead to bad decisions and losses. Keep your emotions in check and stick to your trading plan.
- Learn from your mistakes
Everyone makes mistakes when trading. The key is to learn from them and not repeat them. Analyze your trades and identify what went wrong so you can avoid making the same mistakes in the future.
- Stay disciplined
Discipline is key to successful trading. Stick to your plan and your trading strategy. Don’t deviate from your plan because of emotions or the latest market news.
In conclusion, following these fundamental trading principles can help you succeed as a trader. Have a strategy in mind, utilise a stop loss, control your risk, be patient, control your emotions, learn from your mistakes, and maintain discipline. You can increase your chances of success in the financial markets by adhering to these guidelines.
Do follow our article and improve your trading Best 2 way to understand stock market & technical analysis.
Open your demat account and grow your money:-