Join Courses
Attend Webinars
Get Free Counselling
  • Select Language
    • Hindi
    • Bengali
+91 9903 222 555
Elearnmarkets - Financial Market Learning
Join Courses Of Elearnmarkets
  • Basic Finance
  • Technical Analysis
  • Fundamental Analysis
  • Derivatives
  • Financial Planning
  • Miscellaneous
No Result
View All Result
  • Basic Finance
  • Technical Analysis
  • Fundamental Analysis
  • Derivatives
  • Financial Planning
  • Miscellaneous
No Result
View All Result
Elearnmarkets - Financial Market Learning
Home Technical Analysis
778_ELM_Blog Image_03

10 Basic Rules of Trading to Always Stay in Profit

Elearnmarkets by Elearnmarkets
December 27, 2018 - Updated on November 18, 2020
Reading Time: 7min read
3
1.2k
VIEWS
Share on FacebookShare on TwitterShare on LinkedIn

Hindi: आप इस लेख को हिंदी में भी पढ़ सकते है|

Bengali: এই ব্লগটি এখানে বাংলায় পড়ুন।

“Great investors conceptualize problems differently than other investors. These investors don’t succeed by accessing better information; they succeed by using the information differently than others.”  –  Michael J. Mauboussin, chief investment strategist of Legg Mason Capital Management

Stock trading (or other markets) is a subject matter of great interest to many. We hear stories where millions are made in markets. There are also instances where people have lost everything. Making money in stock markets is not just fluke, we can actually learn it. Let’s understand a few rules of trading that will help us stay in profit.

Table of Contents
Always keep your trading plan ready
Approach trading like a business to maximize your business’s potential
Take full advantage of the latest technology
Follow conservative investment strategy
Focus on learning from the markets like a student
Don’t bite off more than you can chew
Build up a sound trading methodology that is worth the effort
Do not ignore stop loss
Identify the situation when to stop trading
Stay focused when trading

Rule 1 – Always keep your trading plan ready

Well, there can be no question of trading without a trading plan. A Trading Plan is a roadmap you would follow to implement a trading strategy or multiple trading strategies together.

A typical trading plan would be setting the target price, following a particular trend & price action, setting maximum loss you are allowed to book.
Having a hard and fast rule that you will follow under a particular circumstance without becoming emotional about a particular trade is important.

Rule 2 – Approach trading like a business to maximize your business’s potential

Trading should be approached as a business. A business has expenses and income. Likewise, trading’s expenses are the losses and income are the gains.

So, it’s not worth mentioning that we must maximize our gains and cut our losses (but still I am). If you find that is not happening for a slightly longer duration, you need to introspect further your methodology.

Rule 3 -Take full advantage of the latest technology

Trading involves keeping yourself updated with the latest information like price movement, charts, tables, and other news so that you are able to figure out the trend. Also, you would not want a situation where your orders did not go through because of some lag in your tools of the trade. So, installing essential latest technology to have the edge is a must and this is one of the basic rules of trading in stock market.

Technology needed for trading strategies

image_source: www.rcgdirect.com

Rule 4 – Follow conservative investment strategy

Conservative trading strategy would be to protect the downside. Plan your trading strategy in such a way that there is no scope for unlimited losses. In, trading you have to take some losses time and again. But your losses should be calculated and must be included in the trading strategy.

Learn to invest in stock market with Stock Investing made Easy course by Market Experts

Rule 5 – Focus on learning from the markets like a student

Whether you win or lose, always make it a point to learn something from your trades. Observe, if things panned out as per your trading strategy, if not then what went wrong? Try and note your mistakes so that you do not repeat them. Try to figure out the “Cause” and “Effect”. Try to learn about stock market with various tools. Remember “Market humbles everyone”. No one is above the market.

Rule 6 – Don’t bite off more than you can chew

Trading as we all know is a risky business so let’s not make it easier to lose money. There is a “2 percent of the capital rule” which is one way to minimize taking extra risk. If you are using leverage, you should be very sure about it. Notice that your bet size is as per your trading strategy and not ‘at the moment’ type of decision.

Rule 7 – Build up a sound trading methodology that is worth the effort

Trading is all about rules, methods, discipline, patience and being unemotional. The methodology is your scripture. Thou art not to deviate from your pre-set rules and strategy. You may get away with violation a few times. But, in the long run, you will suffer if you don’t stick to your trading strategy. So, working on your trading strategy is the most important act of trading. All the effort you put into that is totally worth it.

Rule 8 – Do not ignore stop loss

We trade to make profits. But there will be situations where things will go against your trading strategy and you will have to book losses so that you survive to fight another day. Stop loss does this for you. Setting stop loss for every trade is as essential as estimating profit. Always remember, while we aim for profits, we must at all times protect our downside. That will be automatically done another rules of trading that is by not ignoring stop loss.

Stop Loss for Trading Strategy

Rule 9 – Identify the situation when to stop trading

There will be situations where emotions will take over our trading strategy and rules, we set for ourselves. Remember you cannot expect to extract revenge from the market.

For example: If you lost money trading Infosys stock, don’t get into a mindset that you’ll have to recover your losses from that stock only. Maybe it is not the right time to trade in that stock, so get out of it.

If such a situation arises where you need to stop trading. Then, respect that situation and stop trading. The market doesn’t care about someone’s ego or expectations.

Rule 10 – Stay focused when trading

“Do not take your eyes off the ball.”

As long as you are in a trade, staying focussed is quintessential. Complacency can make you bleed. As it is tough to make money in the market and trust me you don’t want to ruin any further by being casual about it.

Being focussed increases your chances of identifying trends and other trade indications.

“He was the toughest son of a bitch I ever knew. He taught me that trading is very competitive and you have to be able to handle getting your butt kicked. No matter how you cut it, there are enormous emotional ups and downs involved.”

–Paul Tudor Jones, hedge fund manager, on his mentor Eli Tullis

Bottomline

Trading is tough-there is no denial about it. But the most important fact is that it can be learned through training and practice. Learning is possible with wide range of resources i.e. stock market courses, videos, free ebooks and webinars. Making big money, beating the market is possible if one has the right rules and attitude.

Tags: englishlist of trading strategiesstay In profitstock tradingstock trading strategiestrading strategiestrading strategies for beginnerstrading strategies that worktypes of trading strategies
ShareTweetShare
Subscribe To Updates On Telegram Subscribe To Updates On Telegram Subscribe To Updates On Telegram
Previous Post

7 Rules to Overcome Problems in Technical analysis

Next Post

Pipe Tops and Pipe Bottoms Candlestick Chart Pattern

Elearnmarkets

Elearnmarkets

Elearnmarkets (ELM) is a complete financial market portal where the market experts have taken the onus to spread financial education. ELM constantly experiments with new education methodologies and technologies to make financial education effective, affordable and accessible to all. You can connect with us on Twitter @elearnmarkets.

Related Posts

Technical Analysis

Channel Chart Pattern – Formation, Types, and Trading

December 17, 2020
1.7k
Technical Analysis

Symmetrical Triangle Pattern – Meaning, Formation & Trading

December 8, 2020
1.7k
Technical Analysis

The Ultimate Guide to Triple Top and Triple Bottom Pattern

December 3, 2020 - Updated on December 7, 2020
1.1k
Technical Analysis

Pennants Pattern – Formation, Trading and how it is different from Wedges

November 26, 2020 - Updated on January 15, 2021
1.8k
Next Post

Pipe Tops and Pipe Bottoms Candlestick Chart Pattern

Hourly Chart

Market Ends In Green, Recovered Almost 325 Point From Its Weekly Low

Technical Analysis

Problems in Technical Analysis and How to Overcome Them

Comments 3

  1. kartikey tiwari says:
    2 years ago

    intresting blog post

    Reply
    • Sakshi Agarwal says:
      2 years ago

      Hi,

      Thank You!!

      Keep Reading!!

      Reply
  2. froleprotrem says:
    10 months ago

    Well I really enjoyed reading it. This post offered by you is very helpful for proper planning.

    Reply

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Follow Us

Download App

Register on Elearnmarkets

Continue your financial learning by creating your own account on Elearnmarkets.com

Register Free Account

GET ARTICLES ON EMAIL

Enter your email address:

Categories

  • Banking
  • Basic Finance
  • Bonds & Fixed Income
  • Budgeting & Savings
  • Capital Markets
  • Charts
  • Charts, Patterns & Indicators
  • Commodity, Currency & FOREX Market
  • Derivatives
  • ETFs & Mutual Funds
  • Financial Planning
  • Financial Statement Analysis
  • Fundamental Analysis
  • Macroeconomics
  • Market Analysis
  • Market Updates
  • Market Wrap
  • Marketshala
  • Miscellaneous
  • Open Interest
  • Personal Wealth
  • Retirement Planning
  • Sector Analysis
  • Tax Planning
  • Technical Analysis
  • Trading Terms, Rules & Strategies
  • Visit Elearnmarkets
  • Courses
  • Webinars
  • Financial Guides
  • Get Free Counselling

© 2020 Elearnmarkets All Rights Reserved

No Result
View All Result
  • Article Categories
  • Basic Finance
  • Derivatives
  • Financial Planning
  • Fundamental Analysis
  • Market Analysis
  • Miscellaneous
  • Technical Analysis
  • Select Language
    • Hindi
    • Bengali
  • Learn finance
  • Browse Courses
  • Webinars
  • Free Guides
  • Get Free Counselling

© 2020 Elearnmarkets All Rights Reserved