India’s dynamics are changing drastically and with the advent of PC traders are preferring Online Stock trading which help them to keep track on there trades. As an Old saying goes Smart work is always better than Hard Work same holds true for Stock trading. Online trading is all about putting your knowledge to work. So I have summarized few rules for success in Online Stock trading.
1) Chose the Type of Trading you want to do: Day trading, Swing trading, Short term Trading and long tern trading Give plenty of thought to what kind of online stock trading you want to do. Most of traders start with day trading and end up being a Long term traders as they do not have emotional control to take loss. So give it a thought process what kind of trading style you are more comfortable with. Think from Money management Risk management perpective. Plan Plan Plan !!
2) Your Trading Style To Your Lifestyle: Your choice of trading style is especially important from a lifestyle perspective. Day trading usually means you will be at your computer for hours at a time. Longer term online stock trading doesn’t require as much attention. As a rule, the shorter the time frame the more intense the trading.
3) Choose the most economical broker and fight for broker to get the least possible brokerage: Brokerage and commission plays a vital role in trading, as Commissions and Taxes such a lot of money from your trading account. Keep a hawk eye on the brokerage you are getting charged.Always go with Reputed brokers like Sharekhan, IIL Angle broking etc..
4)Before taking any trade always keep in Mind RR Ratio ie. Risk to Reward, Ideal Risk to reward comes at 1:3 but it can get varied with your style of trading and in any case should not be less than 1:1. risk management is essential for successful online stock trading. The only way to get the reward is to control the risk.
5) Make Sure Your Trading Method Works in All Markets. The stock market doesn’t just go up. It goes down too – sometimes for months or years. Use an online stock trading method that takes advantage of both down-markets and up-markets.
6)Always trade Liquid stocks ie. stocks having good Bid and Ask ratio Eg Nifty Future, Reliance which are quiet liquid and trades can be done easily. Never trade in Stocks Options which are highly liquid and trading into Penny stocks in a Big NO.
7) Know When To Sell Your Stocks. Everyone focuses on what and when to buy stock, yet few ever consider the best time to sell. Paper profits only become real money when you convert them to cash. Don’t let your stock gains disappear due to neglect. Plan ahead. Before you get in, always know the specific conditions that will signal when it’s time to get out.
8) Check Your Winning Edge. A “winning edge” consists of the favorable factors that set winners apart from losers. You must have a reliable advantage to consistently make money trading online. Ask yourself – “What factors give me an edge?” Be specific. If you aren’t sure, you probably don’t have an edge. The only way to know is to analyze your methods and measure your results.
9) Invest in a good online stock trading education. Surveys show that 9 out of 10 investors believe their chances of winning are “above average” yet more than 80% of them actually lose money. This is simply because they don’t have the specific information needed to win. As we say at RightLine, “If you think education is expensive, try ignorance.”
10) Associate With Successful Online Stock Traders. Online stock trading presents unique challenges. Unlike traditional stock trading, there is no live broker to help you along the way. If chosen carefully, experienced online traders can be among your best trading resources. You may even wind up with a good friend!