Trading Golden Rules

Trading Golden Rules

Trading Golden Rules 

Trading in Stock Market, forex, Commodity or any other asset need good knowledge and experience to survive and grow capital consistently. Before starting trading one need to have better understanding or knowledge of Technical Analysis or Fundamental Analysis. A professional or a successful trader is the one who know the entry & exit point of the particular trade with following proper discipline and Risk management. Traders or Beginners can be successful in Trading by following the Golden rules in mind. Below are Few Golden trading rules to abide by:

Protect your capital  

This is the most important principle in trading. You can no longer be in the game if u does not have capital to trade. Invest your capital wisely and smartly. Always keep a measure of Risk you are owing to a particular stock. In stock market the first preference is to protect the capital and then grow capital steadily.

Plan your trade.

The Analysis and stock selection should always be done when market are closed. The advantage of doing analysis post market is, there is no distraction of price movement, no noise and helps 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 must maintain the discipline to follow the trade plan.

Respect Risk

To be a successful trader or investor in Stock market, Risk management is most important step to focus on. Before taking a position always defines the amount of risk you are will to accept with each trade. Every trader must have practice of placing stop loss order in system which ensures the appropriate losing amount in particular trade position.

Have Realistic Mindset

Many people think trading is very and stock market is 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 good amount of knowledge and experience to survive in stock market. At initial stage, first priority should be to save capital and with that gaining small gain over period of time with small quantity. After gaining experience and returns one can look to increase position size with appropriate risk appetite


Treat trading as Business and not as Hobby

Many trader feels trading is an exciting and adventurous thing to do which is not the right approach. To be successful, one must think like full time or part time business not as hobby or like time pass activity. If it is approached as a business there are commitments, more leanings, and maximize the business potential.

Don’t Let a winner become a loser

In stock market, exiting the position at correct time is most important than taking the position. One must avoid being greedy and must take the money off the table at appropriate gains or ride the gains with trailing their stop losses. As a trader it Is important to understand that stock market is ever going process and there will be endless opportunities.

Master few strategies

It is bad idea to keep switching from trading strategy to another. It is important to practice one strategy and master in it rather, than becoming jack of all. A successful trader always focuses and experiment from all angles and master the strategy rather than jumping from one strategy to another just because few trades delivered losses. In stock market there is no HOLYGRAIL strategy which will provide 100% successful results and anyone who promises or claims 100% profitable system, it’s always a good idea to ignore that gimmick. Always try to master in 2-3 strategies which suits your trading style and invest more time and money to gains more experience and avoid being Jack of all but master of none.

Maintain Trading Journal

A serious trader must maintain trading Journal which helps to check performance matrix, track progress and mistake made while trading. The Trading Journal mainly includes Entry and Exit date, time and rates. Trade outcome, Trading thesis and other market-related points like Overall market sentiment, any events etc. Trading Journal provides valuable information of performance, which strategy is more profitable in which market condition, to assess risk management and position sizing etc.

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