Basic Rules to trade in Stock Market

By | February 3, 2015
  • Intraday trading should be done without any ego.One should follow the trading system to make decisions and not anticipate the market to perform as per personal expectations.Market does not listen to anyone its a WILD ELEPHANT.

 

  • Flexibility and discipline are key for a successful trader.Be flexible in changing position and discipline in taking profits and  cutting loss.

 

  • Do not be afraid to be a sheep.As a trader you will not lose anything if you stay out of market if its confusing Like RBI day when it give wild moves. Protect your capital.

 

  • Do not overtrade. Be within your limits.

 

  • Take a position only when you know your profit goal and know when to stop if the market goes against you.

 

  • Trade with the trends rather than trying to pick tops and bottoms.

 

  • Do not trade many markets with little capital. Trade in Nifty but do not trade in Bank Nifty if you have less capital

 

  • Have a combination of contracts while trading.Do not trade just the volatile contracts like Bank Nifty.

 

  • Calculate the risk/reward ratio before putting a trade on, then guard against holding it too long.

 

  • Establish your trading plans before the market opens to eliminate emotional reactions.

 

  • Decide on entry points, exit points and objectives.

 

  • Subject your decisions to only minor changes during the session.Do not change during the session unless you have a very good reason.

 

  • Follow your plan.

 

  • Profits are for those who act, not react.

 

  • Once a position is established and stops are selected, do not get out unless the stop is reached or the fundamental reason for taking the position changes.

 

  • Use technical signals (charts) to maintain discipline – a vast majority of traders are not emotionally equipped to stay disciplined without some technical tools

4 thoughts on “Basic Rules to trade in Stock Market

  1. prakash tanak

    Very Informative. I liked specially you remarks that “Do not trade many markets with little capital. Trade in Nifty but do not trade in Bank Nifty if you have less capital” & “Have a combination of contracts while trading.Do not trade just the volatile contracts like Bank Nifty.”

  2. Sunil

    This is the system i follow for intraday. Thanks for a wonderful article Brahmesh.

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