The Bible Of Successful Trading In The Stock Market
Trading is not everyone’s cup of tea:
The earlier you understand this truth, the better it is. You must be fully aware of the fact that when you are into any kind of speculative activities, you are inviting not only physical but also a big amount of emotional stress. If you feel that you have been in the scene for a bit and that entitles that you will forever stay here, I am afraid you are farthest from the truth. Any past profitable investment and high returns do not entitle you or guarantee you great profits in the future. The nature of the trading is such and there is nothing much that anyone can do. However, what you can do is to be mentally prepared for either super profits or super losses in case you like to trade in commodities which have higher leverage.
What is life if full of care?
If risk savvy is what you are and you do not occasionally mind losing a bit of the money if you know that you are also learning from your mistakes, no harm in going ahead. Only make sure that you read the following points and keep them handy when you are in two minds whether to trade or not to trade!
You must have a definite trading plan:
We all agree that as humans under stress we can behave very differently from what we are in normal circumstances. And if you are into speculative business, the stress can be so daunting that you may want to change your approach as often as possible. The first rule of this rulebook is that you shall not do that.
When you start trading, you will either mentally or somewhere make a note of the approach that you will follow. This jotting down of your approach will serve as beacon light when you get carried away by emotions or when you are stressed in times when you have lost your money.
Trade if you must, but be double sure:
If you are trading in a commodity, then make one thing sure and that is to make sure that you are sure about what you are doing! If any kind of doubts presents itself in your mind or you are in two minds to trade or not to trade, then this rule book asks to abstain. Because, if your instinct tells you something while your brain is telling you something, you will most probably end up in a loss rather than with profit.
Follow the 40:60 rule:
In any speculative deal, your target ratio of loss to profit should be safely pegged at 40:60. This way the loss is reduced and you can also try and break even on the next deal.
Follow market trends religiously:
Read and research on the market trends. Never become lackadaisical in our approach to understanding if a particular market trend is presently continuing or is receding. In case of doubt, try to read up on past behavior of such trends and whether the market was behaving bullish or bearish during the previous trends.
Winning and losing are two sides of the same coin:
If you have made it in some deals, you can also lose. It would be a folly to think that you will only have a winning streak in the market. Take the losses in the right spirit and make sure that you do not become complacent or disheartened.
Concentrate on one:
Do not put your fingers in too many pies. Rather concentrate on one market and make sure you give it your hundred percent time and energy.
Quit before too late:
If you find that the trend that you were banking on is actually declining and that those are signs that you must quit slightly earlier, don’t keep on pondering about it. It is better to be safe than sorry. A little bit of loss can always be recoverable but a total loss can be catastrophic.
Start each day as new:
Don’t ponder too hard on your past performances whether they were good or bad. Start each day as a new one and make sure that at the end of the day you are not comparing your gains with someone who has invested more money than you. Gains made must be compared only with other trader’s gains irrespective of the amount of investments.
Hire a professional broker:
If you are a beginner, it makes perfect sense for you to hire a broker who will professionally help you take decisions which will positively reflect in your portfolio. The fees that he/she charges will definitely be value for money if he can help you make a considerable profit on your investment with his sound advice and policies.