Trading Rules

 

Starting with the blog on a day when market tank down almost 2% where bulls are outrageously bleeding is always a difficult. Only one thing can make you stay in market, Discipline with simple Fundamental as well as Technical analysis.

Few Trading rules I have came across from different sources:

Although these rules are difficult to practice but you have to think ahead of the crowd.

It is most important to have SL or TSL for your each and every trade.

Question you may ask that my trade always hits the SL and then rise from there on. So problem is not in SL but at the level you are buying your script.

·    Buy always near to a technical levels such as 5sma, 21sma, 50sma, 200sma

·    Put the SL below those levels. Trader (1% to 2%) and Investor (10% to 15%)

·    When I am bullish, I must buy on a rising scale. I don't buy long stocks on a scale down; I buy on a scale up.

·    When I am bearish, I must sell on a scale down.

Always Trade with the trend

·    Stop trying to predict the direction of the stock market.

·    Always first learn the story or conviction behind the movements of the script or market

·    There is only one side to the stock market; and it is not the bull side or the bear side but on the right side

·    Don’t afraid of going short if you are convinced

Do your homework and ready with the resources

·    Most people get interested in stocks when everyone else is. The time to get interested is when no one else is.

·   You're neither right nor wrong because other people agree with you. You're right because your facts are right and your reasoning is right - that's the only thing that makes you right. And if your facts and reasoning are right, you don't have to worry about anybody else.

·    It's only when the tide goes out that you learn who's been swimming naked.

·    Keep your trading diary up to date

Market does not care what you think

·    Focus on the present “Here and Now”

·    Trade only when probability is in your Favors

·    When in doubt, stay out

Discipline comes above everything else

·    In reality, patience is crucial, but it is a rare commodity

·    Trading is not a daily wage profession, where you need to earn every day

·    Quit while the quitting is good and cheap

·    Don’t use your emotions while trading, be a machine while trading

·    It’s good sometime to stay away from the market

·    Too much greed is always dangerous

We will follow the above rules in our Trading. We can never catch exact top or bottom. That’s why I always say maintaining SL or TSL. Always have adequate Margin of safety. Never carry a losing position home. Focus on the trade and never worry about market direction and noise. If profitable, continue the trade with TSL. If not, maintain SL or get out on seeing the trade going against you. That's why I don’t want to give targets and later look like a fool. Markets give sometimes more than you want, sometimes less, sometimes loss or nothing

But always focus on the Net Gain which will make you survive in this market full of sharks, whales and other powerful animals.

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