Basic Stock Investing Rules - Every Successful Investor Should Follow
Trading in share market is not a cup of coffee that anybody could drink
. It is a serious game and involves strict rules and honest dedication. Investors and traders that follow rules with dedication could only make profits in stocks investing or trading. A trader or investor must at least know and follow some of the basic rules so as to invest and trade successfully in a share market or any other financial market.
Following are the basics of trading game in the share markets. All investors must follow them to ensure effective trading and of course for making profits.
1) Buying low and selling high- it is the most basic thing that every investor must know. A layman could also tell you the secret of making profit by buying at low and selling high. Despite this fact the majority of investors and traders do the opposite. A basic problem of most of the investors is that they are emotional and, hence forget the basic rule of trading in some conditions. Success of every stock trader is determined by the fact how smartly he sells for higher and purchases for low.
2) Trend or flow of the market- trend in the share market and stock price are the only reality of trading and rest are myths. Do not get fooled with other techniques that disapprove the stock markets. Share market is always right. If you want to play safe and make money by trading then, you need to do your trading in accordance with the flow of market. Some people, trade opposite to the direction of market and have sometime made money as well, but such method is extremely risky. If the market is down and you are long, then you are wrong while market is right and vice-versa also holds true. The simple reason behind is that the stock market is driven with a lot of simultaneous factors while a trader going opposite is just an exception. If you stay in flow with market then, chances for you to stay in trade are long and of course money making chances are also bright.
3) Trend is the king-
share markets are volatile and trading works with momentum. If the market or particular stock goes up with a certain pace then, there are equal chances that market or stock will go down with the equivalent pace, as the trend changes. Therefore, trend is the king of trading that change rules according to its motion.
4) Don't try to find market's movement reasons- a lot of
investors and traders try out finding reasons for movement of the market. They use different techniques, constantly watch markets, etc, but never find a certain reason. It is true that, no one could actually tell a particular reason for movement of market. So do not waste your time. Trading is done in accordance with perception of market and not reality. So, concentrate in trading rather than reality of market. If you want to stay in game and make money in trading then, concentrate on direction and duration of market's movement not on its reasons.
5) Work on your profits and minimize loses- every investor must try to run his profits and eliminate all loses quickly. This is the only way out to become successful in share trading. If you want to achieve this target then, you have to trade with pure discipline. Discipline is a necessary condition to trade successfully. Share trading done with discipline helps investors and traders to stay long in market and enjoy making huge profits.
6) Experience and knowledge- there is no age bar for gaining knowledge. Therefore, you must try to acquire maximum knowledge as you can, but make sure you get it from trusted and reliable sources. Experience is what makes every investor a professional trader. So, keep practicing and become successful trader.
Summary: There are several rules to invest and trade in share markets. Some of the basic rules are must for every investor and stock trader and they must follow them with sincerity and dedication to earn profits.
Basic Stock Investing Rules - Every Successful Investor Should Follow
By: Mohit Kukreja
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