if you are a day trader in the stock market then you are at the perfect post. Today we are going to talk about the golden rules for trading in the stock market. Trading is a type of business where is no limit to making money if you are doing it with proper discipline and patience.
If you don’t control your emotion, greed, and fear during trading then you will lose all your money in one it is also possible in day trading.
So let see what are the Golden Rules for Trading in Stock Market
Trading Rule No 1- Always trade with Stop Loss
The first rule of day trading is to always use a stop loss.
Your stop loss can be set using technical analysis, news, or your money limit. Stop loss means that limit which is set by the trader if the price reaches that level, I will exit my trading position.
Stop loss must use in both conditions if you are going for short or long. You should never trade without it. Stop Loss is critical for saving you from big losses in day trading.
Trading Rule No 2- Trade in Liquid Stock.
First and foremost, you must trade in liquid stocks.
The term “liquidity stock” refers to a stock with a small difference between its buy and sell the range.
Many Buyers and Sellers are present in the liquid stock.
The question is how to find the highly liquid stock. You have to find them on google. Just check the daily average volume of stock then you can decide whether a stock is liquid or not.
Never trade in the less volume stock because this type of stock only gives momentum when there is any event for the company otherwise, they are not suited to trade in intraday trading.
Trading Rule No 3- Protect your Capital
This is the most important rule of day trading. If you want to earn money from trading then you must learn how can I protect capital first. You must decide how much capital you are willing to lose.
Any trade you make must be evaluated in terms of the risk to your capital. The best way to survive as a trader is to safeguard your capital.
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Trading Rule No 4- Don’t Listen to Others’ Opinions or Trading Tips.
You are not required to make any trade by entering someone’s opinions or tips. You should conduct your own analysis, regardless of how good the stock analyst is.
You must conduct your trade on your own planning. The analyst’s trade does not have to be correct; it can also be incorrect. You must maintain your discipline and not choose anyone’s point of view when trading. Always trade with your own trading setup.
Trading Rule No 5- The Trend is Your Friend
When there is a strong trend with little volatility, trade-in quantity.
You receive a distinct trend at least once per week or month. Since the trend is your best buddy on this day, trade in large volumes.
When you have full confidence in the trading setup then you can take entry into the trending market.
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Trading Rule No 6- Don’t trade on a News Basis
Never trade on a news basis. Cause if you trade on a news basis, sometimes you earn but most of the time you can lose money. Always remember never to take the big position before any big events.
Trading Rule No 7- learn from the last Mistake
Always make note of your mistakes in the book. because your most recent mistake is often your finest teacher. Try to study trading books by experienced traders who discuss their trading experiences in those books so you may learn from them. You can also learn from other people’s mistakes.
Trading Rule FAQ
Disclaimer- This content is only for Education purposes we are not providing any advice or calls. You can trade at your own risk.