Trading or investing in the stock market is not easy as it looks. It requires patience, luck, and most important knowledge about stocks, sectors, and the overall market. Most of the investors who started investing in the stock market for the long term ended up trading in short term. This happens because they saw quick money coming in short term and thus chose trading over investment. However, one should keep few rules in mind before starting trading.
1. Assess your risk appetite before starting to trade.
2. Be realistic. Always trade on price swings and not mood swings.
3. Risk only what you can afford to loose.
4. Always use Stop Loss. Trading without a stop loss is a big NO.
5. Do not try to time the market. Remember a trader or anyone in the world cannot pick top and bottom.
6. Tips will not always work in your favor. Develop your own methodology and trade accordingly.
7. Always know when to stop trading in the market.
8. Take the help of a Registered Advisor or Registered Analyst. Never deal with unregistered Brokers and never trade on tips from your friend.
9. Generating profit along with Capital Protection should be the aim of a trader.
10. Use hedging to minimize your risk.
So these are few of the many rules for traders in the stock market. Do let us know about your trading experience.
Ayush Bhargava, CFPCM
Bhargava Financial Planners
Email – firstname.lastname@example.org