Plan your Trade and Trade your Plan
Have a sound statistically backed training plan. Plan should have clear entry and exit levels. Find stocks that fit the trading plan and follow them closely. Look for critical break of support and resistance levels. Follow precisely your rules laid down in plan for entry and exit.
Trend is your Friend
Always trade in direction of trend in time frame you are trading. Take help of trend lines and moving averages to find trend. Always keep eye on trend in timeframe one stem more then what you are actively trading i.e keep track of weekly and monthly trend if you are trading chart.
Trade only in active & high Volume Stocks and keep track on change of volume
Always trade highly liquid stocks to ensure minimum slippage while entering or exiting the trade. Remember it takes volume to move stocks, so start getting to know your stock's volume behavior and the how it reacts to spikes in volume. You can see these spikes on any chart. Volume is the key to your stock's movement and success or failure.
Protect your capital
Divide your capital in 10 equal parts. Never deploy more than five parts at one time in market. Protecting capital is vital requirement to be successful in trading business. Use stop loss judiciously and other money management techniques.
Minimize the use of margin
Trading with margin looks very attractive but never go on margin until you have mastered the market, charts and your emotions. Margin is duel edge sword it has potential to give higher profits but can also wipeout your account.
Cut your losses and let your profit run
Hold your strongest stocks the longest protected buy trailing stop loss and close the positions that stop moving in your direction or are acting sluggish quickly. Remember stocks are only good when they are moving in your direction.
Trade both uptrend and downtrend
Most investors only trade when stocks are going up. To be successful trader learn to capitalize on both uptrend and downtrend moves. Make yourself aware of F&O segment of market to be able to short a script in downtrend.
Learn to trade global markets
With the evolution of online trading and relaxation of RBI laws to invest overseas, successful traders are investing in global markets to take profit from high liquidity and volatility. Learn to trade global market using instruments like CFDs and FOREX.
Treat Trading as business
Do not become overconfident by success in your current job; be humble to learn trading from scratch as a total new business. As any other business knowledge, training and practice only can make you successful.
Thus the above points are only guidelines and one will be able to make continous money from the market provided these things become second nature for the traders.
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