Dealing with stock market demands systematic & disciplined approch. It is the attitude - the mind-set that makes people make money consistantly over a longer period. Following are the major attributes defining the mind-set of a successful market participant.
- Risk Penny to make Pounds: Stock Market is the only place where prudent trading or investing can multiply wealth at a faster rate. There is no need to invest huge amount to make big money, in fact it is dangerous. Always risk small amount to make good returns.
- There is no "Sure-Fire" technique of making money in stock market: The secret is to loose the least when you are wrong and to make the most when you are right. Extensive research to find most profitable opportunities & close monitoring is the key to enjoy trading & investing.
- Plan your Trades & Trade your Plans: On the basis of Research Reports, subscribers can easily plan their Trades or Investments by identifying the Entry level, Stop Loss level and Exit Level.
- Never let the market forfeit your profit: Once your trade or investment becomes profitable, use trailing stops (the trailing stop levels will be indicated to you in the research reports) & never allow the market forfeit your earned profit.
- When in doubt get out and stay out: If you have any doubt about the market or stock movements, it is always better to close the trade or liquidate investment & stay out of market till your doubts are cleared.
- Trade and invest only in liquid stocks: Watch the volume level of the stocks before entry. Higher liquidity is prerequisite for swift buying & selling.
- Never average losses, unless planed in advance: Averaging is basically a corrective action but in majority of the cases, it only multiplies losses. Unless in advance, the total trading or buying lot is split into smaller lots to execute orders at different rates, averaging should not be used.
- Dont be impatient. Wait for the opportunities before you act: Market does provide ample opportunities but many times one has to wait for the confirmed opportunities. Itching to trade or invest every day is impatience.
- Discipline is the key:
- Managing risk: Risk maximum 2 % of deposits in one trade while day trading - 5 % of deposits in trend trading (short term deliveries) & 10 % of deposits in long term (portfolio).
- Managing trades: Always enter with Stop orders, put Stop loss & Exit orders.
- Managing money: Use 50 % of your investible money into long term investment (portfolio), 30 % in trend trading (short term deliveries) & not more than 20 % in day trading.
- Limit the size of your portfolio: The number of shares held may be unlimited but the number of companies must be limited. It does depend on the amount of investment & time allotted to manage investments but the number should be manageable.
- Trade or Invest only for big moves: Select only the trades or investments with bigger profit potential & better risk–return ratio. Generally, 1:3 or 1:5 is a good risk–return ratio.
- Always remember the power of compounding: Holding the stocks with good fundamentals over a longer period can multiply wealth. The crucial factors are to pick right stocks at right price, sell 50 % when prices double & hold the balance for a longer time. Tech-Funda analysis makes this possible.
- Trading or investing is a personal matter; never discuss it with persons other than an experienced Broker or your equity Consultant: Uninformed interactions develop wrong opinions & perceptions. It is therefore advisable to avoid it.
- Never trade or invest borrowed money, use your owned free savings only.
- Market is always right and it is under no obligation: Market participants make mistakes in reading the markets. Market discounts all the factors & reflects the practical reality of stocks & indices.