How to become a profitable trader

Trading is a profession which requires a person to be disciplined, control over his emotion, risk management.

90% of Traders fails in this profession only 10% excel.

 

So what makes trading so difficult?

I have compiled few rules which you should adhere with and read it daily when you had a bad day.

These are some of the trading rules which are universally valid for stock/commodity trading.

Take a print out and nail it on your trading desk.

  • Never risk more than 10% of your trading capital in a single trade:Try to distribute your trading capital in different trades. Do not risk it in single trade .
  • Always use stop loss orders: Never keep mental stop loss because as soon as your SL will hit your emotions will take over you and will never exit the position.
  • Never do overtrading. Do not overtrade if you are doing extremely good to make more money or extremely bad to recover your losses. Either you will lose all your profits or will add more losses to your existing losses.
  • Never let a profit run into a loss: Most of traders will let your profit turn into loss because of GREED.
  • Don’t enter a trade if you are unsure of the trend.
  • When in doubt, get out, and don’t get in when in doubt: It’s your money at stake so if you are in Doubt never trade.
  • Only trade active stocks: Trade in Stocks having liquidity.
  • Never average a loss: Loss should never ever be averaged. If you are in Loss means you did not made a right trading bet.Exit the losing trade asap.
  • Never get out of the market because you have lost patience, or get in because you are anxiously waiting.
  • Avoid taking small profits and large losses:90% of traders who loses will exit when Stocks moves 1% in their favor and if it moves even 5% down from purchase exit is out of sight.
  • Never cancel a stop loss after you have placed it.
  • Avoid getting in and out of the market too soon.
  • Be willing to make money from both sides of the market: Do not have one sided mentality. As a trader your job is to earn money, It does not matter you trade long side or short side.
  • Never buy or sell just because the price is low or high: Unitech went down 10% lets buy it. Nifty went up 200 points lets SELL it. Well if things were so easy everyone will make money. Trading never works in this way.
  • Never hedge a losing position.
  • Avoid trading after long periods of success or failure
  • Don’t try to guess tops or bottoms.
  • Don’t follow a blind man’s advice.
  • When you lose don’t blame it on luck.

The Most important aspects of trading is you need to have a Trading System.

I have interacted with many traders and one common mistake I have observed is

NO ONE TRADES WITH A TRADING SYSTEM.

 

Most of traders buy because they feel like buying and sell because they feel like selling. If one follows this approach you will never earn in stock market.

16 thoughts on “How to become a profitable trader”

  1. Which is the best method to calculate pivot point support and resistance levels for intraday trading in NF.Kindly explain this.

  2. I AM VISITING UR BLOG REGULARLY FOR THE LAST THREE MONTHS, AFTER I ACCIDENTLY FALL ON UR SITE. UR COMMENTS ARE VERY USEFUL FOR BOTH NOVICE AND EXPERIENCED PEOPLE.

    I HAVE LEARNT TA FROM INVESTOPEDIA, CHARTSCHOOL ETC. I AM REGULAR VISIOTOR OF NSEGUIDE, CHARTINK, ICHARTS BUZZING STOCK ETC.

    MY REQUEST TO PEOPLE LIKE U IS TO EDUCATE SMALL TIME INVESTORS IN HOW TO PROTECT THEIR CAPITAL, AND BOOKING PROFTS IN THEIR PROFITABLE TRADES, SELECTION FOR WINNING STOCKS ETC.

    TRADING OR INVESTING IN STOCK MARKET IS A FEELING AND ONE WORK REALLY HARD TO LEARN THE FINNER POINTS.

    THERE IS NO SHORT TO SUCCESS THAN HARD WORK, PATIENCE FOR LEARNING, EXECUTING THE TRADE PLAN WITH DESCIPLINE.

  3. Hi Bramesh,

    A very valuable piece of advise. Please keep on flashing these kind of lessons to keep learners like us on track.

    Thanks & Regards

    Sandeep

  4. Dear RaghuJi,

    First i would congratulate you for developing your own trading system.

    If your system is not working in all market conditions which means you have not done proper backtesting of the same.Please backtest the system and get confidence in the system.

    If you are doing Intra day trades you should emphasis more on 5 min,15 mins and Hourly charts and Daily Charts

    Weekly charts will be more beneficial in swing and positional trading.

    For more discussion please contanct me on bhandaribrahmesh@gmail.com

    Rgds,
    Bramesh
    09985711341

  5. Dear Sir,

    after lots of research i have devloped a trading system for day trading, but my problem is some times it works some time it doesnt. i follow daily charts and weekly, and try to trade intraday based on those charts, do i need to do intraday trades based on intraday charts or something else y the same pattern same indicators on daily charts works correctly many times but at the same doesn’t work also.
    can u share any points

  6. Dear Sir,

    I have few trading system which can give good trading signals on intra day and swing basis.
    If intrested to learn please give me a call@09985711341

    Rgds,
    Bramesh

  7. Thanks a lot sir for your appreciation. Well Risk Management will depend from individual trader mindset.
    Some are OK with 10% and some with 5%.
    Traders with moderate risk profile should take your advise into consideration.
    Thanks again for your comment.

    Rgds,
    Bramesh

  8. 😛 hello brameshji – excellent piece of advice — realy inspiring writing — small suggestion– risking 10 % on a single trade can be too risky and devastating –i feel risk per trade — max 2 percent on trading capital– max risk per month — not more than 5 percent of trading capital– regards –dr vaibhav

  9. It is a very valuable lesson for me. I am the loosing trader which you mentionned above.
    Now I understood why I lost lakhs of money in market.
    Do you have any easy stratagy to enter and exit levels…?
    What are the parameters to be check before enter a buy or sell ?.
    What is the confirmation of up trend ? and Down trend ?
    I am trading in Nifty option only.

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