- In life, there should be certain rules that should be important as well as inviolable.
- They will make up the core of the continued existence of society.
- This will also apply to trading.
- The stock market might seem like a very chaotic place, but it is governed by its own set of rules.
- These rules have been set up by SEBI, and there are also some rules that traders create for themselves.
- SEBI rules are totally straightforward as well as very easy to follow.
- They will be preventing the traders from falling victim to fraud in the stock market.
- This will include general guidelines as well as a code of conduct that needs to be followed while trading.
- Trading rules are not written anywhere.
- But they are simply created by the traders for their own betterment.
Trading rules that every trader is supposed to follow
- There are several trading rules that are made by the traders.
- Some of the main trading rules will be discussed here.
The top 5 trading rules that every trader is supposed to follow are as follows:
Create a stock market trading methodology
- It is very easy as well as common for the new traders as well as experienced traders to be swept away in the heat of the emotions while trading.
- This is fine as long as you are following a trading methodology that is completely based on the facts about the stock market.
- A trading methodology will be created by only those who are knowledgeable about the stock market as well as its components.
- This methodology will not be created by the ones they would wish while trying to use trading.
- This will also require patience as well as a certain amount of time to study properly.
Take only careful risks in trading
- Risk will go hand-in-hand while trading.
- There is no particular way to completely avoid risk while trading in the stock market.
- Effective risk management strategies will go a long way in mitigating some of this risk.
- Sometimes, this will also fail in extreme circumstances.
- The only way to avoid a huge loss of capital in the stock market is to only invest as much money in trading as you would feel comfortable parting ways with.
- This rule will not only apply to the traders who don’t have a lot of capital to invest in trading but also to those who do.
Protect your trading capital
- Gone are the days where only the richest or the most elite of the society members could only indulge in trading.
- In today’s day and age, trading is open to anyone with a modicum of knowledge as well as the need for enough money to begin to engage in the stock market.
- However, not everyone is supposed to have that minimum required amount for trading from the beginning.
- A lot of traders in the stock market are coming from middle-class families, and it will take a long time for them to save that starting capital.
- Thus, it is also of utmost importance for the traders that they protect their trading capital through any and all means.
- This will also entail them making informed trades and not taking unnecessary risks in the stock market.
Do not lose focus
- It is very easy to get lost in the euphoria of a winning trade or even the despair of a losing trade in the stock market.
- But every trader is supposed to remain focused on the big picture.
- Winning or losing one or two trades will not make any difference and will also not affect your overall profits.
- Profits in trading can be calculated as a collective and not through individual trades.
- You should always keep this in mind and continue trading.
- By doing this, you will definitely make big in the stock market.
Learn when to stop trading
- Beginners at trading might get confused by this approach.
- But the more experienced traders, the more they will know about the importance of this rule.
- This is not something like protecting your trading capital.
- It is about trading ineffectively in the stock market.
- No trader is supposed to be a bad trader, but only the strategies used are bad.
- But the constant use of the ineffective trade even after revising the trading plan again and again will imply that there is something fundamentally wrong about your understanding of trading.
- It will also mean that you need to take a step back and learn everything again from scratch.
Conclusion
These 5 rules are the ones that every trader should follow, and they are also necessary for any aspiring trader to prosper in the stock market.
Frequently Asked Questions (FAQs)
Q1) What is the secret of successful traders?
The secret of successful traders is emotional control.
Q2) Which type of trader is most successful?
Day traders are the most successful.
Q3) Are successful traders just lucky?
Being successful as a trader does not mean that you are lucky.
Q4) How do I get rich as a trader?
You can get rich as a trader by investing regularly.
Q5) Are traders intelligent?
The idea that the traders are inherently smarter is a misconception. Success in trading doesn’t lie solely on raw intelligence but rather is based on a combination of character traits, expertise, discipline, resilience, and discipline.
About Us
Nifty Trading Academy is our academy where we teach you about the stock market as well as technical analysis. We also provide live trading sessions and upload blogs for the same.