Hi to all members of TJ... The main purpose of starting this thread is to make investors and traders aware of certain fundamentals which would go in a long way to make excellent profits consistently. I invite members to share their views and make this thread better..(so i am replying)
1.It should be understood in the first place that trading in shares and commodities in a serious full time business.It is not gambling as many view.One of the main reasons for making loss is this attitude of thinking and treating trading as gambling........Gambling is trading without stop, careless attitude . Actual speculation is just opposite
2.Trading is an full time business .It requires FULL time and dedication.-true
3.Trading requires good capital.In today's inflation,even for starting a very small business one requires a capital of not less than five lacs. This is the minimum,in my opinion,one should have as capital before venturing into full time trading.If you do not have the capital,be content with an investor and do not try to become a trader...very true
4.Do not take exposure limit from brokerage house.It is the first suicidal step.....true
5.Practice money management .Divide your capital into four equal parts and start with one part at a time and increase gradually.
6.Invest in basic infrastructure.You need a good computer with good internet connectivity and power back up.A quiet room is a must.Anyone compromising on this and planning to trade sitting before a broker terminal will never get anywhere.
7.Read all necessary books on trading.Visit various web sites to gain knowledge.Keep updating your knowledge.Make it a habit to keep updated with national and global events and developments.Avoid having television in your trading place.All news are available online.Do not let the commentators in television disturb you.
8.Know well what you are buying and selling and why and its valuation.Combine fundamentals with technicals....true
9.Be very clear about exit of a trade.It is more difficult than entering a trade.Never be greedy......true
10.Master the art of controlling emotions. Be it profit or loss,keep cool.....most imp
11.Trading is a lone mans business. Do not try for consensus on a decision or trade in a group.........true
12. Never never go for paid or free so called tips.You are sure to go bonkers if you do the mistake of tasking tips or recommendations.....true
13. Be realistic about your expected return by trading. You cannot make unrealistic returns..........for me return depends upon opportunity & my understanding on market. Even o return is ok for bad days
14.Go for a brokerage house which is reliable and reasonable in brokerage....true
15.Master the art of hedging rather than going for stoploss......here only i differ . the concept of hedge is good if it suits u. Concept of pair trade is also different style. As i am hardcore SPECULATOR......my view may not be agreeable but still expressing
1] u have to create the reason why u would succeed as trader, as well as what type of trading suits u???
a] Maggie trader-momentum
b] Quick nimble trader
c] Actual swing trader
d] Intermediate positional trader
FOR C & D you should have basic fundamental/economy understanding as So if one is seen sufficient, depending upon level of that country's depth may find some thing workable for market.
1] basic stock idea - a company will prosper if normally management GOOD, has good Order book at hand, Debt is not troublesome, sector scenario is not bad.
2] as present price always reflect Near future- if one find some better HIDDEN prospect, that stock is a buy candidate, and at suitable dip, one is acquiring that stock.
3] Alternaterly when growth prospect is BRIGHT,& Big Fund is chasing ,u can play -buy on top.
4] But when u get strong bear market or financial problem in a country, - bottom fishing to be done in VERY good growth company- irrespective of its sector. Dont sell them in start of bull run - HOLD & get money for ur patience.
...................................this i say COMMON sense on market, must be adhere by all traders , except hard core Maggie trader. Maggie trader= quick momentum intraday trader.(they r master in order flow study,Mostly use indicator based mechanical system for entry-exit.)
there r other 3 group of traders , whom i want to mention.
1] quick nimble trader- mostly available in traderji. Mainly follow 1/2-1 hr chart , use some support as buy zone, sell for predefined loss or Target achieving.
Some of them also USE break out strategy - for making quick money.
- but main theme is NOT MIX THEM.
2] ACTUAL SWING TRADER-understand some bias on market , preferably in day chart- use buy low, sell high. Alternately use pullback strategy. Very good at reading price action.
3] intermediate positional trader- refer weekly/daily chart of nifty, sector - sometimes buy when price starts upmove from a stagnant bottom .
Sometimes play long move on a strong market- based on economic data.
Definitely play short on sector/stock at imp supply zone.
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2 - u have to do ur best to minimize effect of your normal emotion on trade decision making- develop stoicism in mind . i took data from vendor ,and use HR/day chart to minimize volatility of price to improve my decision making.
3- pl SEE the market , atleast in 2 different time -one present another one higher. Higher for perspective -what to be done = uptrend,downtrend ,notrend, normal= when to buy at support/when to sell @ resistance. SPL CASE STUDY= when to sell after break down of imp pivot , when to play BREAKOUT this time (volume thust to be seen)
4]- Studying of price for further clarity - some typical candle , continuity or reversal chance by deciphering MOMENTUM tools like RSI/ william% R etc
5] Reaching a Band zone for reversal trade(may use bollinger-hurst cycle)/ divergence study. As Reversal trade at start is Contrary in nature, u have to keep SMALL stop- be ready to hold 1/2 of it if correct- develop comfort to pyramiding.
6] Certain time Market is Not predictable - pl avoid , when to sit tight is very imp for trader.High volatility is when bull&bear unsure for their direction but ready to fight. mechanical entry /exit helps then.
7]-since in trading u have to fight against the best, pl create a stocklist, scan idea, ur comfort with money management- as well as study strategically what may work in future.ALWAYS keep fit ur SURVIVAL instinct.
All the very best!!:thumb:
