Trading Mantra & Trading Rules

                          

 

 

Golden Rules for Trading and Investing

  1. Follow your rules.
  2.  Don’t forget rule number 1.
  3. Always trades with a stop loss, define it before you enter a trade.
  4. Always decide your profit booking method in advance, greed may come in between.
  5. Do not count on your money when the trade is open.
  6. Do not overtrade; trading a position which is bigger than your portfolio size in excitement can be a big risk.
  7. Choose to stay in market only when required, choosing a strategy that keeps you in market only 50-60% of times helps you avoid price shocks.
  8. Cutting a big amount of risk with a nominal cut in profitability is a good trade off.
  9. Trade a position which has reward: risk ratio at least 1 :1 or greater.
  10. Do not trade illiquid stocks, which cannot fulfill your order when required (low volume stocks)
  11. Do not over leverage your positions; with extra reward it brings extra risk.
  12. Set your daily, weekly, monthly, yearly targets and so on for risk as well as reward.
  13.  Do not trade on a day with holiday type volumes.
  14. Make your trading boring; if it is interesting there is some flaw.
  15. Trading is a Business! Plan ,define well in advance all the requirements and rules before your execute.
  16. Maintain a trading journal, paper trade after a loss.

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