Showing posts with label Trading Rules. Show all posts
Showing posts with label Trading Rules. Show all posts

Few points to follow for successful trading & investing in stock market.

  • You will receive minimum 8 to 10 intraday calls + 1 or 2 positional calls & Nifty calls depending on the overall market trend.
  • Try to do maximum calls & maintain same value for each call. ( I mean say Rs 10000 for each call ). This will help to minimize losses in case few calls go wrong.
  • Do not try to take big positions in only 1 or 2 calls or the stocks you like. This will be risky if those stocks do not perform.
  • Do not try to match the quantity for each stocks.
  • Be flexible on both sides of market. Buy & Sell or Sell & Buy.
  • Always follow the trend & do not trade against it.
  • Try to set intraday targets for profit / loss. ( Say Rs 1000 per day ). If you achieve that target in first 4 to 5 calls then need not trade further.Logic is to take profit at home.
  • In case of Markets being Dull or not moving according to the predictions, then the calls for that day will be reduced.
All alerts about book profit, book partial profits, stop hit & book loss will be sent to you on regular basis till the market is closed. All the calls will be followed till the end.
I hope once you follow this points strictly then you can earn huge profits from the markets. Do not forget to apply stoploss.

Golden rules of equity investing

  • Choose the right company : Look for superior and profitable growth. The company should earn at least 20% return on its shareholders’ capital. Ideally a long-term investment perspective (more than five years) allows you to participate in the company’s growth. At the short end (3-6 months), share performance is driven more by market sentiment and less by company fundamentals. In the long run, the relevance of the right price diminishes
  • Be disciplined : Stock investing is a long, learning experience. You will make mistakes, but also learn from them. Here is what you can do to ensure a smooth ride.Diversify your investments. Do not put more than 10% of your corpus in one stock, even if it’s a gem. On the other hand, don’t have too many – they become difficult to monitor. For a passive long long-term investor, 15-20 is a healthy number. Use this asset allocation tool to find out if you need to invest beyond equities.Research and analyse your company's performance through quarterly results, annual reports and news articles. --Get a good broker and understand settlement systems--Ignore hot tips. If hot tips really worked, we'd all be millionaires. --Resist the temptation to buy more. Each purchase is a new investment decision. Buy only as many shares of one company, as fits your overall allocation plan.
  • Decide how much to invest : Since equities are high risk, high return instruments, how much you should invest would really depend on how much risk you can tolerate. Take this quiz to find out what your risk profile is.
    Once you have done that, use this asset allocation test to calculate exactly how much of your savings you should invest in equities.
  • Monitor and review : Monitoring your equity investments regularly is recommended. Keep in touch with the quarterly-results announcements and update the prices on your portfolio worksheet atleast once a week. You can use Moneycontrol's Portfolio to update the prices of your equity holdings.Also, review the reasons you earlier identified for buying a stock and check whether they are still valid or there have been significant changes in your earlier assumptions and expectations. And use an annual review process to review your exposure to equity shares within your overall asset allocation and rebalance, if necessary. Ideally, revisit the RiskAnalyser at every such review because your risk capacity and risk profile could have undergone a change over a 12-month period.

Importance Of Trading Plan ?

Trying to win in the stock market without a trading plan is like trying to build a house without blueprints - costly mistakes are inevitable.
Why do you need a Trading Plan?
1 - During trading hours, emotions will turn smart people into idiots. Therefore, you have to avoid having to make decisions during those hours. For every action you take during trading hours, the reason should not be greed or fear. The reason should be because it is in the plan. With a good plan, your task becomes one of patience and discipline.
2 - Consistent results require consistent actions - consistent actions can only be achieved through a detailed plan.
Trying to win in the stock market without a trading plan is like trying to build a house without blueprints - costly mistakes are inevitable.
What should be in your trading plan?
1 - Your strategy to enter and exit trades
You have to describe the conditions that have to be met before you enter a trade. You also have to describe the conditions under which you will close a position. These conditions may include technical analysis, fundamental analysis, or a combination of both. They may also include market conditions, public sentiment, etc...
2 - Your Money management rules to keep losses small - the goal of money management is to ensure your survival by avoiding risks that could take you out of business. Your money management rules should include the following:
- Maximum amount at risk for each trade.- Maximum amount at risk for all your opened positions.- Maximum daily and weekly amount lost before you stop trading
3 - Your daily routine - after the market closes, before it opens, etc...
4 - Activities you carry out during the weekend.
5 - I also like to include reminders that I read every day
I will follow a trading plan to guide my trading - therefore my job will be one of patience and discipline.
- I will always keep my trading plan simple.- I will take actions according to my trading plan, not because of greed, fear, or hope.- I will not deceive myself when I deviate from my trading plan. Instead I will admit the error and correct it.
I will have a winning attitude.
- Take responsibility for all your actions – don’t blame the market or world events.- Trade to trade well and for the love of trading, not to trade often and not for the money.- Don’t be influenced by the opinions of others.- Never think that taking money from the market is easy.- Don’t try to guess the future – trading is a game of probabilities.- Use your head and stay calm – don’t get excited or depressed.- Handle trading as a serious intellectual pursuit.- Don’t count how much money you have made or lost while you are in a trade - focus on trading well.
A trading plan will not guarantee you success in the stock market but not having one will pretty much guarantee failure.
1 - Your strategy to enter and exit trades
You have to describe the conditions that have to be met before you enter a trade. You also have to describe the conditions under which you will close a position. These conditions may include technical analysis, fundamental analysis, or a combination of both. They may also include market conditions, public sentiment, etc...
2 - Your Money management rules to keep losses small - the goal of money management is to ensure your survival by avoiding risks that could take you out of business. Your money management rules should include the following:
- Maximum amount at risk for each trade.- Maximum amount at risk for all your opened positions.- Maximum daily and weekly amount lost before you stop trading
3 - Your daily routine - after the market closes, before it opens, etc...
4 - Activities you carry out during the weekend.
5 - I also like to include reminders that I read every day
I will follow a trading plan to guide my trading - therefore my job will be one of patience and discipline.
- I will always keep my trading plan simple.- I will take actions according to my trading plan, not because of greed, fear, or hope.- I will not deceive myself when I deviate from my trading plan. Instead I will admit the error and correct it.
I will have a winning attitude.
- Take responsibility for all your actions – don’t blame the market or world events.- Trade to trade well and for the love of trading, not to trade often and not for the money.- Don’t be influenced by the opinions of others.- Never think that taking money from the market is easy.- Don’t try to guess the future – trading is a game of probabilities.- Use your head and stay calm – don’t get excited or depressed.- Handle trading as a serious intellectual pursuit.- Don’t count how much money you have made or lost while you are in a trade - focus on trading well.
A trading plan will not guarantee you success in the stock market but not having one will pretty much guarantee failure.

Common Trading Mistakes ?

MISTAKE ONE
Lack of Knowledge and No Plan
It amazes us that some people expect to trade the stock market successfully without any effort. Yet if they want to take up golf, for example, they will happily take some lessons or at least read a book before heading out onto the course.
The stock market is not the place for the ill informed. But learning what you need is straightforward – you just need someone to show you the way.
The opposite extreme of this is those traders who spend their life looking for the Holy Grail of trading! Been there, done that!
The truth is, there is no Holy Grail. But the good news is that you don't need it. Our trading system is highly successful, easy to learn and low risk.
MISTAKE TWO
Unrealistic Expectations
Many novice traders expect to make a gazillion dollars by next Thursday. Or they start to write out their resignation letter before they have even placed their first trade!
Now, don't get us wrong. The stock market can be a great way to replace your current income and for creating wealth but it does require time. Not a lot, but some.
So don't tell your boss where to put his job, just yet!
Other beginners think that trading can be 100% accurate all the time. Of course this is unrealistic. But the best thing is that with our methods you only need to get 50-60% of your trades "right" to be successful and highly profitable.
MISTAKE THREE
Listening to Others
When traders first start out they often feel like they know nothing and that everyone else has the answers. So they listen to all the news reports and so called "experts" and get totally confused.
And they take "tips" from their buddy, who got it from some cab driver…
We will show you how you can get to know everything you need to know and so never have to listen to anyone else, ever again!
MISTAKE FOUR
Getting in the Way
By this we mean letting your ego or your emotions get in the way of doing what you know you need to do.
When you first start to trade it is very difficult to control your emotions. Fear and greed can be overwhelming. Lack of discipline; lack of patience and over confidence are just some of the other problems that we all face.
It is critical you understand how to control this side of trading. There is also one other key that almost no one seems to talk about. But more on this another time!
MISTAKE FIVE
Poor Money Management
It never ceases to amaze us how many traders don't understand the critical nature of money management and the related area of risk management.
This is a critical aspect of trading. If you don't get this right you not only won't be successful, you won't survive!
Fortunately, it is not complex to address and the simple steps we can show you will ensure that you don't "blow up" and that you get to keep your profits.
MISTAKE SIX
Only Trading Market in One Direction
Most new traders only learn how to trade a rising market. And very few traders know really good strategies for trading in a falling market.
If you don't learn to trade "both" sides of the market, you are drastically limiting the number of trades you can take. And this limits the amount of money you can make.
We can show you a simple strategy that allows you to profit when stocks fall.
MISTAKE SEVEN
Overtrading
Most traders new to trading feel they have to be in the market all the time to make any real money. And they see trading opportunities when they're not even there (we’ve been there too).
We can show you simple techniques that ensure you only "pull the trigger" when you should. And how trading less can actually make you more!
MISTAKE EIGHT
Believing that trading is the same as investing
When you buy and sell stocks and mutual funds at the drop of a hat (read – without any research or planning), you are essentially ‘trading’. This will not help you to build long-term wealth. Yes, this is a fantastic way to make money, but for your broker, not you!
MISTAKE NINE
Being too conservative with your money
Real returns’ is the keyword here. These are returns post inflation. Putting away money in safe options such as bank deposits, Public Provident Fund (PPF) and so on might give you a negative real return. This is true especially in times of high inflation, such as now.
MISTAKE TEN
Being too aggressive with your money
This is just another way to lose money. Pumping money into high risk avenues, such as equities, without understanding can prove dangerous. A Warren Buffet saying sums it all up -- To finish first, you have to first finish!