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10 Important Rules of Trading

The stock market looks very attractive. We hear many such stories in which people have earned billions from the stock market. And maybe that's why it fascinates us so much.

But there have been stories where people have lost everything.

Money in the stock market is not earned only by chance, it is a very important education, only after accepting it, any person can move forward in it.

Stock trading (or other markets) is of great interest to many people. We hear stories where millions are made in markets. There are also instances where people have lost everything. Making money in the stock markets is not just accidental, we can actually learn it.

Let's know about some rules that can help us earn profits.

Let's understand some rules that can help us benefit.

Rule No. 1: Always have your trading plan ready

Just as there is no question of trading without a trading plan, it is not right to start trading without a trading plan.

The trading plan will be like a road map that shows us the right path to trading strategies.

Well, there can be no question of trading without a business plan.

A trading plan is a roadmap that you can follow by applying one trading strategy or several trading strategies.

A standard trading plan will set you up with the target price trend and price action in mind, which will tell you the maximum loss you can make. This will help you book your loss in advance so that you can set your trading strategy keeping your profits in mind. A typical trading plan can adjust the price of the target by following a particular trend and price function, adjusting the maximum loss allows you to determine.

Always keep in mind that in the stock market, you have to make your trading decision while keeping your emotions under control. There is a hard and quick rule that you will follow without being passionate about a particular trade that is important in a particular situation.

Rule No. 2: Treat trading like a business to maximize the potential of the business

Look at trading as a business. Just as there are income and expenses in a business, similarly trading has income (profit) and trading expenses and losses. Business should be approached as a business. There are expenses and income in a business. Similarly, trading expenses are disadvantages and income gains.

So just as you always ask for profits in your business, and find new ways to move forward from it, similarly in trading, if you do not benefit in the long term, then improve your trading plan for Rule 1.

Trading should be approached as a trade. A business has expenses and income. Similarly, the expenses of trading are disadvantages and income gains.

Rule No. 3: Take full advantage of the latest technology

In trading, you always have to know all the information related to the current stock market such as prices, charts, patterns, etc. so that you can understand the trends going on in the market. Apart from this, you will never want that your orders are not properly placed due to not being technologically updated. That's why you have to stay updated.

Trading involves keeping yourself updated with the latest information such as price movements, charts, tables and other news so that you are able to detect this trend. Also, you won't want a situation where your orders don't move due to some malfunction in certain means of trading. Therefore, it is necessary to install the latest technology necessary for rapid growth.

Trading in Technology

Rule No. 4: Follow a conservative investment strategy

Conservative Trading Strategy Will Save You From The Downside | You have to set your trading strategy in such a way that you avoid unlimited losses. It is true that you may face a loss at some time in trading, but make sure that this loss does not drown you.

The conservative trading strategy will be to protect the downside. Plan your trading strategy in such a way that there is no possibility of unlimited losses. In trading, you have to bear some losses again and again. But your losses should be calculated and included in the trading strategy.

Rule No. 5: Learn and understand the stock market like a student

Focus on learning from markets like students

Whether you make money in the stock market, in a trade, or not, you have to keep in mind that you learn something from each trade and apply it to the trades that come your way. You have to understand where the trading strategy you set went wrong and how you can improve it.

Whether you win or lose, make it a point to always learn something from your trades. If things turn out according to your trading strategy, if not what went wrong? Try to observe it and note down your mistakes so you don't repeat them. Try to find out "cause" and "effect."

Try to learn from different sources. Remember "the market makes everyone humble". No one is above the market.

Rule No. 6: Pay Attention to Risk in Trading

There is a rule, called "2% of the capital rule", according to which you can reduce the risk or risk. Apart from this, if you take leverage, then you have to pay special attention that you bet as much as you are accurate for your trading strategy and do not make any decisions in haste.

As we all know that trading is a risky business, so it is not easy to earn back the lost money. There is a "2 percent of the capital rule" which is a way to reduce excess risk. If you are using leverage, you should be very sure about it. Note that the size of your bet is in accordance with your trading strategy, not on this type of decision.

Rule No. 7: Choose an Accurate Trading Methodology 

Build a sound trading method that is worth the effort

Trading is all about rules, methods, discipline, patience and being superhuman to overcome emotions. The trading methodology you follow, you need to keep in mind the advantages and disadvantages of that methodology. You have to follow the rules you have already set.

By doing this, you will be able to determine an accurate trading plan and trading methodology in the future and trade correctly. Methodology is your science. Don't deviate from your predetermined rules and tactics.

You can get away with violating it for some time. But, if you stick to your trading strategy, in the long run you will suffer losses. Therefore, working on your trading strategy is the most important task of trading. May all the efforts put in by you be fully worthy of it.

Rule No. 8: Don't Ignore Stop Loss

We do business to make a profit. But there will be situations where things will go against your trading strategy and you have to secure losses so that you are left to fight the other day.

Stop loss does this for you.

Setting a stop loss for each trade is as essential as predicting a profit.

Always remember, when we aim for profits, we must protect our negative side at all times. This will be automatically handled by a stop loss.

Stop Loss Trading Rules

Rule No. 9: Identify the position to stop trading

There will come a time when we will put our emotions in our trade. We can also get angry when there is some kind of loss, but remember that you can not vent your anger on the market. For example, suppose you bought a stock and made a loss in it, do not wait for the time that you will earn money from the same stock again. Maybe that is not the right time to trade in that stock.

And if there is a situation that indicates that you should not trade anymore, then do the same and work twice on your strategies and come back to the market.

There will be situations where emotions will handle our trading strategy and rules we set for ourselves. Remember that you can't expect revenge from the market.

For example: If you have lost Infosys share trading, don't get into the mindset that you have to make up for your losses from that stock itself. Maybe it's not the right time to trade in that stock, so get out of it.

If a situation arises where you need to close the trade. Then, respect that position and stop trading. The market doesn't care about anyone's ego or expectations.

Rule No. 10: Stay focused while trading

"Don't take your focus away from the goal. ”

As long as you're in a business, staying focused is quintessential. Making money in the stock market is a bit difficult, but not impossible, a little carelessness can drown all your hard earned money. Decency can kill you. Since it is hard to make money in the market and I believe you don't want to waste in any way by being casual about it. Being focused increases your chances of identifying trends and other trading signals.

By staying focused, you tell about many technical analysis indicators and trends in trading.

Main facts:

Trading is a bit difficult, but it is also true that with hard work, hard work and continuous practice, you can profit in the stock market. Trading is hard—there's no denying it. But the most important fact is that it can be learned through training and practice. Making big bucks, beating the market is possible if one has the right rules and attitude.