How to trade in Indian Stock/Share Market, Strategies and Rules
How to trade in Indian Stock/Share Market, Strategies and Rules
Indian Stock Market is very vast market where trading is not so easy we have to follow certain rules and conditions while trading in this market. Some of them trade by taking advice/tips from advisory company while rest of them trade on person views and news they get from market. Here in Stock market anything can happen in minutes, this market is very fluctuating like example :-
World stocks hit a one-month high on Wednesday 16 june and the euro hit a two-week peak high because of strong gains on Wall Street. The success of this week's European debt auctions encouraged risk taking ability. If the one had buyed shares before last week and selled here in this week will probably have huge profit.
The BSE in this week bench mark the Sensex and by this it rose further over 111 points.
The Stock Market is totally depended on selling and buying on stocks, there are many questions and confusions arises in the minds of the people going to BUY or SELL particular stocks, the question may be like:-
Why to Buy the particular stock, i will be benifited or not by doing this?
What is the risk in getting profit? May I sell or wait for favourable time? Etc.
To avoid problems arising with such questions and getting answers you should look over certain facts and figures like:-
One should analyse the stock or company he is going to invest on regarding the financial situations of the company. This can also include comparing the price, financial activity, stability, Market value, Demand etc. of particular company with other companies.
If the condition here is for BUYING, One should always buy any stocks of a company by its Fundamental analysis, this type of analysis shows "Value investing" , "Growth of Stocks" , "Give preference to Dividend Stocks"
Rather if we talk about SELLING stocks then also fundamental analysis is worthfull, like
Sell when you have a recent or current "News Flash" , "Price of Stock is overevaluated".
Apart from all the questions and answers there is need to follow some rules and strategies for profitable trading in Stock Market, which are illustrated as follow:-
Rules one should follow while Trading:-
1. Divide your capital into 10 equal risk parts.
2. In a single trade always try not to invest 10% of your Capital.
3. Never do over trading.
4. to trade efficiently never average your losses.
5. No guessing on Tops and Bottoms always trade on confermed News.
6. Avoid getting in wrong and out wrong; or getting in right and out wrong. This is making a double mistake.
7. Never take lead you may loose heavily.
8. Don't follow tips only.
9. Risk should be distributed differently among different Market.
10. When you lose don't blame it on luck.
11. Don't trade if trend not clear
12. Never limit your orders. Trade at the markets
13. Only trade active markets.
14. Bear markets have no support and bull markets have no resistance.
15. Never buy a stock to get dividend.
16. Avoid partnership in trading accounts.
17. Buy on rumor and sell on news.
18. Never let profit turn into loss.
19. Decrease your trading after a series of successful trades.
20. Never buy a stock just because it has fallen from a great high, nor sell a stock because it is high priced.
Strategies one should follow while trading:-
1. Always develop a winning Strategy in market while trading, never ever try to earn profit instantly and all together in one turn always have patience because small profits daily can give large anual return.
2. Winning strategy is a strategy with the lowest risk/return ratio.
3. Always be sure that expected return is larger than the transaction cost (bid-ask spread + brokerage commissions).
4. Never fear losses, be brave enough and always keep in mind that stock market is the place where one looses and another gains.
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