Basic Rules For Successful Stock Trading

Stock trading is gaining popularity every day. It is the most sought after financial tool by people to make money. Almost every other person or household talks about it. There are some basic rules for successful stock trading, which are followed religiously by traders. And if you also stick to these rules, you will also be successful and make money in stock trading.

It’s important to go through these successful stock trading rules before you enter the stock market, whether you are a novice or an expert.

Rule1. Plan your trade:

Have a proper trading plan to succeed, which should consist of a position, why you enter, stop loss point, profit taking level, and a sound money management strategy.

Rule 2. Follow the Trend

Go long if the stock is bullish and go short if the market is bearish, you short. Never go against the trend. Follow this very important rule for successful stock trading.

Rule 3. Preserve your capital

Set a limit to your trading and preserve your capital. Do not trade more than 10% of your portfolio in a single trade. If you don’t follow this stock trading rule, you’ll be out of the market very soon.

Rule 4. Know when to cut loss

Sell your stock and let it go if the trade goes against you. If you hold on too long, thinking that the price will go up, you only end up losing more money. Decide your stop loss price before you enter a stock trading.

Rule 5. Take profit when the going is good

When the trade is turning out to be good, take the profit. Decide how much profit you are willing to take. Watch the profit run by following this rule for successful stock trading. Buy rising stocks and sell falling stocks.

Rule 6. No place for emotions:

Greed and fear are the two biggest emotions in trading. Don’t let these influence your trading. A successful trader is always emotionally stable.

Rule 7. Keep a trading journal

When you trade a stock, it helps to pen down the reasons why you buy or sell, and your feelings at that time. Analyze later and write down the mistakes you've made, as well as the right decisions you made. Another of successful stock trading rules is to keep learning and keep improving.

Rule 8. Trade on your own research

Stock trade only based on your own research and analysis. Avoid trading on what your friend or others have to say. A well informed trader always marches ahead.

Rule 9. Stay out if in doubt

If you are unsure of the trend in the stock market, stay away. Do not ignore this rule for successful stock trading. Sometimes, it helps you gain a lot by doing nothing.

Rule 10. Do not overtrade

You should not have more than 3-5 positions at a time. Too many positions can make you go out of control and take wrong emotional decisions. Hence, do not trade for the sake of trading.

Rule 11: Master one style.

Develop a trading style of your own, master it and then stick to it. Never jump from one trading style to another. Follow this rule for successful stock trading.

Rule 12: Be an extraordinary trader

To be successful in the stock market, there is no need to do anything exceptional. . Outstanding stock traders are consistent and disciplined.

It takes a lot of discipline to help you reap huge profits and chart your way to the stock trading success. So read the above rules for successful stock trading before you enter the stock market, even if you are a successful stock trader.

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