If you are a new trader you must be struggling as a stock trader to make profitable trades. This article will give you 10 good tips to make your trading career successful faster.
In short three things are very important to be a successful trader:
1. 100% Control over Greed and Fear,
2. Proper Planning in Trades, and
3. Proper Risk and Financial Management of Your Portfolio.
Without control on the above, its almost impossible to become a good trader. Treat your trading career as a job.
Here are some more important tips to become a successful trader:
4. Focusing is Important:
Like an eagle you must be focused in all your trades. This is the reason you should take maximum of three strategies at any given time-frame. Anything more than three, you will lose focus. For example in one strategy there can be three-four trades interlinked to each other, so total trades become more than 9 or 10. Anything more than that, its hard to manage.
Record all your trades, and then narrow down to the ones that works best for you.
5. Use Moving Averages:
For most of my trade set ups I use moving averages. In fact I am a very SIMPLE TRADER so I go for Simple Moving Averages. A Simple Moving Averages (SMA) is an arithmetic moving average calculated by adding the closing price of the security for a number of time periods and then dividing this total by the number of time periods.
I look for 20 day SMA which is good for short term targets, and 50 day SMA which is good for long term targets. On top of that I do proper financial management also. For example how much to invest for a particular trade/investment. Some take a larger portion, some smaller, some average depending on what my research concluded.
The above combined simplifies my profit and losses. For example say if I take a very small risk in a stock and wiling to exit in profit only, then my maximum holding period is 6 months. But if the risk is large, then of course I keep a strict stop loss and when profits comes I keep a trailing profit booking system to maximize the profits.
It’s VERY HARD to describe exactly what I do else I would have made a course on lots of things to make money from stocks markets.
Now what I will say you won’t believe – for me making money from stock markets is now VERY EASY. I fail to believe why 99% of traders lose money when there are some very easy ways to make money. In fact I feel strange that why I also lost money when I started trading. It looks small but that 7 lakhs was 95% of my total net worth. 🙁 To survive I had to take a personal loan of 1 lakh.
Anyway its now easy for me to make money from stock markets. One of the easiest of them is already in my option course. In the course you will learn hedging options with options, hedging future with options and hedging equities with options. As far as hedging is concerned my course will teach you all the best ways to hedge Options, Futures and Equities making sure if you follow you will make small profits consistently, losses if ever be very small due to hedge.
I also invest and trade mutual funds, invest in short term stocks & long term stocks with different risk management. There are so many ways to make money from the stock markets but it’s very hard to teach all of them to all of the people, so I have just limited it to my course. By doing it at-least you will also start making profits. Making profits is more important than losing money – how-much ever the profits are it does not matter. If profits are consistent, you can compound and make huge money over time.
6. Study Different Time Frames:
Especially if you are a Intraday day trader you need to study different time frames. Some stocks perform better on 5 minutes charts, some on 30 minutes and some hourly charts. For volatile charts 5 minutes is better, and for slow movers longer time frame needs to be studied.
Daily chart patterns is the best way to analyze a stocks move, because it tells the bigger picture.
7. Learn to Manage Your Risk:
I have said this earlier and repeating again. Different trades needs different set ups and risks involved. Risk does not just means the stop loss but it also means what percentage of your portfolio you are going to invest in a trade.
Remember that no strategy is a guaranteed winner – risk is involved, so you have to decide how much to risk.
Proper risk management means sticking to stop losses, sticking to targets, and risking a small portion of your account on every trade. If you are a new trader its better not to risk more than 5% on a single trade of your portfolio.
With proper risk management rules you can be right half the time and still make money trading.
8. Keep a Good Trading Plan:
Your trading plan should come with a reason. Before taking a trade ask yourself – what makes you take this trade? If the answer you give to yourself satisfies you then take the trade. If the answer is because a tip provider said so, or a broker said so, then do not trade.
Your trading plan must have a sold reason.
9. Your Mental Capital & Mental Health, Both Are Important:
Your mental capital is as important as the capital in your trading account. By mental capital I mean control over your emotions – fear and greed and any other emotion that can destroy your trading plan.
Losing your focus means losing money.
An easy way to waste your mental capital is revenge trading. DO NOT TRADE TO TAKE REVENGE ON STOCK MARKETS. Stock markets does not know you or even Warren Buffet – so why do revenge trading? Stock market is a non-living thing. If you trade to take revenge on stock markets you will destroy yourself, not stock markets.
10. It Is Good To Have A Mentor For Help In Trade Set Ups:
If you are new or even experienced trader and losing money trading, it is better to get a mentor. Trading by yourself can be challenging and it will increase your time taken to learn good strategies. Finding a trading mentor is essential for your trading success. If you can get a mentor you will avoid trading mistakes yourself and save a lot of money that you can lose by speculative trading. You can learn from your mentor’s experience without suffering yourself. Finding an good mentor will save you years of suffering and lakhs of rupees wasted on researching yourself.
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Dilip Shaw, Founder
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