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1.Stock Market |
Stock market is a marketplace of organized exchange where the buyers
and sellers of the securities operate through auction process.
The price at which the exchange of the securities takes place is
more of a psychological factor of fear and greed than of the
fundamental value behind it. That's the reason why the stock price
movement is hard to predict even though it has a recognizable
repetitive pattern.
Due to it the only CONSTANT in the market is UNCERTAINTY where the
prices are going to move next.
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2.Why you want to trade or invest in
market |
The decision to trade or invest in stock market must be conscious
decision of your own ,it must not be of your friends, relatives or
colleagues.
Decide on why to trade or invest in market before you enter the
remaining steps. Because if you get the why right you will get the
how right not easily but definitely.
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3.Trading goals |
Have a reasonable expectations form the market.
Your trading goals helps you determine the market, time-frame you
like to trade.
If your expectations from the market are right you automatically get
the discipline and psychology to win the market in the long-term.
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4.Market to trade |
Choose the market you like to trade depending upon your need,
capital, time and the knowledge you have whether you like to trade.
1. Securities
2. Commodities
3. Currencies
4: Time frame to trade
Choose the time-frame you like to trade .whether you like to be
1.short-term
2. med-term
3. long term trader.
The greatest number of losing traders is found in the short-term and
intraday ran This has less to do with the time frame and more to do
with the fact that many of these traders lack proper preparation and
a well thought-out game plan. By trading in the time frame most
unforgiving of even minute error and most vulnerable to floor
manipulation and general costs of trading, losses due to lack of
knowledge and lack of preparedness are exponential. These traders
are often undercapitalized as well.
Winning traders often trade in mid-term to long-term time frames. Often
they carry greater initial levels of equity as well.
Trading in mid-term and long-term time frames offers greater
probability of success from a statistical point of view. The same
can be said for level of capitalization. The greater the initial
equity, the greater the probability of survival.
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5.Trading methodology |
Trading methodology differs from person to person .it is better to
have a trading methodology which is simple takes into account the
following price characteristics.
Trend,Volatility,Momentum and
Cyclical nature of prices
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6.Money management |
1. Capitalize yourself sufficiently to meet your trading goals.
2. Don't over leverage yourself then your ought to be.
3. don't withdraw profits often, since profits should serve as a
buffer to your future losses.
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7.Trading psychology |
1. Don't come to the markets with quick rich attitude, expect only
reasonable profits from the market.
2. Don't expect certainty in the markets, market is full of
uncertainty .try to manage the uncertainty with probability in your
favor with proper home work.
3. accept the losses quickly and gracefully. let the profitable
position running with trailing stop losses.
4. Don't avoid trade due to past losses. Loss is part of the game.
5. Don't hurry for trades for fear of losing a opportunity.
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8.Trade preparation |
1. Have a game plan for your trade. Decide in advance the entry,
exit & stop loss for the trade before getting in to the trade.
2. Follow the game plan with discipline on every trade you take.
This can only give you a long-term success in the market.
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9.Trade execution |
Execution can be the weakest link in an otherwise great market
strategy. After all, it's a lot easier to find good stocks than to
trade them for a profit. So how do we enter the market at just the
right time and capture the big moves we see on our charts?
1 . Decide how long you want to be in the market before you execute.
Don't day trade an investment or invest in a swing trade.
2. Seek favorable conditions for trade entry, or stay out of the
market until they appear. Bad execution ruins a perfect setup.
Staying out of the market is an aggressive way to trade.
3. As and when the favorable conditions for the trade entry are met
don't try to avoid the trade with your personal emotions.
4. as the same way for exit when the conditions for exit are met
don't delay the exit with your personal emotions.
5. Use market orders to get in fast when you can watch the market.
Place limit orders when you have a life outside of the markets.
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10.Trade management |
Managing open positions is the most difficult task the swing trader
faces. Danger can rear its ugly head at any time and turn a healthy
profit into a nasty loss. Too often, we jump into a good setup, only
to watch it fail because of poor trade management. This is
especially true with newer traders who think the markets are little
more than a pick-and-play game.
• Decide in advance how actively you should manage open positions.
The pros watch every tick and act on short-term swings. Part-timers
read the morning paper and learn everything they need to know. Your
own efforts need to fall somewhere in between.
• use trailing stop-loss to lock in profits.
• Recognize when you're wrong and need to get out. Find the price
that ruins the trade, and don't outthink the market when it gets
hit. The move could be a fake-out or the start of something big.
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11.Trading success |
Trading is business
Consider trading as a business not a gambling place. so every trader
need to pass these three stages.
1. Initial stages will be filled with only net losses. you need to
take complete responsibility of this and accept the losses try to
learn lessons from each trade so you don't make the same mistake
again.
2. In second stage if you have learnt lessons right in the first
stage you will at least in a position to be on No loss/Nonprofit
zone.
3. you enter the net-profit zone only if get all the above 11 steps
right and have the discipline to follow it without fail in the long
term.
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