Golden Rules For Trading In The Stock Market

Golden Rules For Trading In The Stock Market

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The coronavirus pandemic changed everyone’s life. I would say, it has changed our lifestyle and our thought process as well. Now people know the value of relations, the value of time, the value of money, and the value of togetherness. Yes of course, maximum people around the world suffered a lot and even still suffering. It will take time to come into a normal lifestyle. Where lots of people were suffering, on the other hand, most of the people have taken this lockdown as an opportunity. I came to know through a newspaper that in this lockdown, a record Demat Account (Dematerialized Account) has opened in India and the numbers are still increasing. Many stockbrokers are opening Demat account either with nominal fees or lifetime free and the brokerage also very less. Apart from this, they are providing many offers like a daily tip, your portfolio handling, and earning from referrals. Actually if we see, this is the best option to earn money online from home.

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Investing in the stock market is a good habit. I would suggest everyone invest in the stock market for the long term. Many people are doing trading in the stock market but to make money from the stock market is not an easy job. Trading in the stock market is one of the riskiest ways of earning money because a simple investor could be rich in the next moment and a millionaire could be lose their all capital at that moment. It all depends on your knowledge and experience. It requires good knowledge of shares, good knowledge of the market, good in analysis, good in the forecast, good in decision making, good in taking risks, and last but not the least is your luck. The rest will learn from their mistakes. There are some golden rules for trading in the stock market, especially for beginners. If you follow these rules, no one can beat you and you will be a good investor.

Here are the golden rules for trading in the stock market.

  • Do Your Homework: – This is the first and foremost step to get into any business. When you do not know anything about this market, how can you invest your hard money in this kind of risky business so do your homework; invest in yourself first. You should read newspapers and magazines to gain more knowledge, information, fundamentals, trend, etc. You should also understand the global effects and market, political effects, government planning, etc. This information will help you in trading.
  • Avoid Tips and Rumors: – Do not invest blindly and always avoid tips and rumors. Tips and rumors attract many innocent investors and the result, they lose their hard money.
  • Invest In Business You Understand: – Always invest in good businesses, not in stocks and only those businesses which you understand. Simply, you should understand the business model of that company, their vision, their goals, and their future plans. Only these things can give you better returns.
  • Use Stop Loss: – ‘Use stop loss – use stop loss & use stop-loss’. If you want to reduce your losses and protect your capital, this is the golden rule to use a stop loss. It is up to you how much this should be. Ideally, it should not be greater than 10 percent.
  • Take Calculated Risks: – Because trading in the stock market is a risky business so you have to take risks in accordance with your risk potential. Calculate your risk capacity and then trade otherwise you can lose your hard money.
  • Do Not Borrow For Trading:The stock market is a kind of fantasy market where everyone enters with their dreams and they think that their dreams will fulfill overnight and they borrow money and starts trading in the stock market. Please avoid it and do not borrow for trading. Always trade with your surplus funds as your investment carries market risk.
  • Do Not Be Greedy: – As a trader, you should not be greedy but you should have a realistic expectation with yourself and with the stock market. Take decisions wisely and patiently. Here, no one is making money in a short time so wait and trade.
  • Diversify Your Portfolio: – “Do not put your all eggs in one basket.” This one sentence tells everything. Yes, do not invest in one stock; diversify your portfolio. Invest your fund in multiple sectors rather than investing all in a single fund. Diversification will limit the losses and protect from risk.
  • Long Term Investment: – It is always better to invest for the long term because you can gain huge profits in long term investment. In the short term, you can make money but high risk is involved but in the long term, you will definitely get good returns but these stock should be good.

Final Words:

No one is perfect in this market and there is no right or wrong formula. Every person learns from their mistakes. Every day is your learning day so keep your mind and eyes open, have patience and faith in yourself. You are the only your master. Your discipline, patience, and consistency can make you a successful investor.

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