How to start investing in Stock Markets?

Prepare yourself I have seen most of the first time investors losing big money in the stock markets and you would come across a number of such investors with terrible experience in stock markets that they hate to even discuss about any shares and feeling very secure with their money being invested in Bank Fixed deposits, traditional insurance plans and Government bonds with a return of about 8 percent a year. They had a sour experience because they had not prepared themselves for investing in stock markets, they simply saw some other fellow making huge money on some news driven stock and next time put a huge sum on his advice or saw an expert on a news channel strongly recommending a stock and the markets turned otherwise. Such people do not dare to take another chance and believe that perhaps they are not made for it and resolve not to even look at it during rest of their lives. The experience might have been different if they would have spent some time researching and had some patience before making a first time entry. Some basic steps for the first time investors are listed hereunder which will be useful to make a successful entry

into the stock markets and for those as well who had a terrible first time experience. Buy stocks while they are moving up; don’t try to catch a falling knife. An old saying, but true. The most important thing in trading is to trade with the trend. A stock should be bought while it is in an uptrend and is moving up. A number of investors think that is has already moved so much how far it can go and ignore the stock thinking that they should have bought it a month ago. But actually there are more chances of a momentum stock’s climbing higher than those which have yet not started moving up. Last year sugar stocks fell more than 50 percent and a number of investors thought that they have already halved, how far can they fall so it becomes a good buy, but the fundamentals did not suggest buying sugar stocks and now they have went down to as low as a third of what they were a year ago. There are oversold situations in the markets and there is a bottom to every fall, but it is impossible to predict a bottom. We have to wait till the downtrend reverses and the stock starts rebounding, there you have to catch it and ride the momentum. Let the knife fall,

vibrate for some time and then you may pick it up; there are less chances of injuring yourself. 2. Do not lose patience and let the stock come to your target. It happens to most of investors that when they want to sell, the stock does not go up and when they have to buy, the stock does not come down. The fault lies not in the stock but in ourselves that we become impatient and try to initiate a trade without waiting, it is very difficult to sit on cash. When you have chosen a stock for buying, decide a price where you are comfortable and wait for some time, let the stock come to your price and you should not be chasing the stock, and bear it in your mind that if the stock does not come to your target, you do not lose anything. But the same is not true while selling, if you get decent profits, sell the stock, don’t expect a fortune from your pick and expect only reasonable returns. Once you have converted into cash some other opportunity will come your way. 3. Invest in blue chips, market leaders and aggressive companies Don’t buy a stock just because it is going cheap. Look at the prospects of the company, you

Bharti. 4. Play both sides of markets. There is an inherent fear in short selling than in going long but truly speaking there are equal chances of markets going up or down so why not pick the trend and go with the trend. ICICI Bank. Most of the retail investors are bulls by nature they only buy stocks and do not short the markets or individual stocks. Reliance Industries. Play both sides of the markets if you want to completely enjoy the game.would see that in the long run blue chips and market leaders would not disappoint you though they cannot be expected to be multi baggers but a decent return is always expected. These stocks are the firsts to recover from any corrections or recessions. Bajaj Auto. You would see Infosys. Don’t be a batsman or a bowler. be an . When there is panic in the markets or there is any negative news on which the markets are bound to fall. then you must be on the short side. Mutual Funds and traders therefore they attract a lot of buying interest whenever they fall down to a bargain price. of course with stop losses as in case of going long. These are the first preferences of foreign investors. Maruti and Unitech in the portfolios of most of the Mutual funds.

you must satisfy yourself before putting your money. 6. Have tips from everywhere. Have an eye for watch and you will find another gem at a handsome price. it is taught everywhere but we still get . Believe in the fact that opportunities always exist in equity markets and lament not for a missed one. A street call or an expert’s call should not be followed blindly. rather you need to keep your senses with you and play intelligently. You must check fundaments and do your own analysis before buying any stock. Check fundamentals before buying.all rounder. Strictly follow stop losses. you don’t need to make all right calls to make money in stock markets. there are ample waiting to be discovered. 5. Opportunities always exist in equity markets. 7. weigh them well in your own way and decide yourself which stocks to pick and when to pick. In these markets everyone can be wrong or right. he who plays smartly will win the game. Everyone knows this. No one knows the future.

carried away with our emotions. yes. will be able to make a right call but when it comes to making a short term call it becomes an arduous job for the most learnt researchers. it feels painful to part with them and that is why when it breaches our stop loss we tend to give it one more chance to make a comeback. deepening our losses. didn’t you? Now by adhering to your stop losses you are trying to restrict your losses and that is a wise thing to do. news flows. However an insight of all major events. when you had decided to invest in stock markets you had agreed to accept both profits and losses. we tend to fall in love with our stocks. I think 9 out of 10 analysts will be right or may be 10 out of 10. financial information and basics of the company gives us a view whether the price of the stock is . so we strictly need to put stop losses to our trades and stand by them to maximize profits. There are so many factors which contribute to the movement of prices that it becomes very difficult to predict their trend. It takes courage to accept losses but it should be part of the game. When it comes to make a long term call. but it doesn’t and keeps going with the trend. and even an experienced investor who reads well.

general trends and Government announcements which are not predictable. After some experience . It works well if you make a prediction for the long term.justified or not. is it worth owning the stock at the given price or the stock is already overvalued. therefore it is easy to make a long term call by using fundamental analysis. And that is why most of the mutual funds take long term calls considering them to be safe. there are more chances of making money. The whole discussion was to bring home the fact that if you are novice to this market make your first call a long term call. but the short term movements are always governed by macroeconomic factors. For example you find a stock which is going very cheap and fundamentals suggest buying the stock but suddenly some negative factor triggers in US and there is a sell off in Global markets and our markets are also not spared and that stock also could not swim against the stream and is hammered down and a good stock gives you a negative return in the short term in spite of being a value buying. But if you have bought if with a long term view and the company is fundamentally sound the stock will rebound when the crisis is over and will give you a good return in the long term.

interest rates. An increase in inflation might trigger the urgency to raise interest rates and increasing interest rates will slow down credit growth and demand in the country and thereby resulting in lower profits by the companies and falling interest rates have an opposite effect and will have a direct impact on the Automobile and real estate companies. inflation. An appreciating currency will attract more foreign investments and . Economy analysis The first step towards picking stocks is to analyze macro economic can become a swing trader or a day trader but first be an investor. The GDP numbers. After having a look at the macro economic factors you will have a feel about the overall future outlook of the markets. exchange rates. industrial growth and a forecast given by the Government on expected GDP and industrial growth numbers are to be tracked. Foreign Direct Investments. A strong GDP growth and industrial numbers indicate a strong economic growth and a growing Foreign Direct Investments shows the potential of companies operating in India. lower interest rates will increase profits of these companies.

crude prices and overall demand and supply situation in that sector. Textile stocks and other sector stocks follow sectoral movements which depends on various factors like international commodity prices. If the industry or the sector as a whole is in a downtrend then there will be a downward pressure on your pick being in that reeling industry. A combined effect of all the above factors gives us an indication of a strong or weak future outlook. currency prices. For example Sugar Industry has been in a downtrend for last one year and the valuations are looking very cheap still the stocks have underperformed if compared with the broad indices. the economy has also been booming. When every thing is going well and the economy is growing there are more chances of stock markets going up and fundamentally strong stocks will rally with the markets. most of the sugar stocks have given negative returns whereas the markets have grown sharply in the last one year. Therefore the whole industry should be . Tea stocks. Oil stocks.carry trades giving boost to the markets. Industry analysis It is necessary to have a look at the industry as whole to which your pick belongs. Similarly metal stocks.

EPS and PE ratio After having a look at the profitability and its consistency. The first thing to watch is the consistency in growth of profits and turnover.analyzed before picking your favorite stock. EPS or earnings per share are the profit per share of the company. this would ensure that the company you are going to invest in will have growth prospects which should be reflected in its stock price. you have to check whether the current market price of the stock is justified or not. This information can be taken from any brokerage house website and such information is also available at the websites of stock exchanges. Company analysis The last step is to analyze the company you are going to invest in. For this purpose you will need financial statements of the company for past few years and the recent news flows about the company. . the turnover and profits should be growing consistently from quarter to quarter and from year to year. Two basic ratios are used to find a correlation between the market price of the stock and the profitability of the company.

The PE ratio or the price to earnings ratio is found out by dividing the Market price of the share by the EPS arrived at above.It can be calculated by dividing the total profits of the company by total number of outstanding shares.78. In this article we shall try to cover practical aspects of investing like opening of various accounts and understanding basic concepts of . 10. 18. 00. 00. In the above example if the stock price is Rs. For example a company makes a Net profit of Rs.000 then the EPS of the company is Rs. These ratios should be compared to the peer group companies.and the total number of shares are 53. In my previous article in this series we had learnt to prepare ourselves mentally to get into the markets and learnt some basic exercise before actually jumping into the markets.86. the more reputed and large sized companies enjoy larger PE ratios as compared to small companies. 00.000/. for example two companies are in the same sector and the size is also not very different then the stock with the lower PE ratio is cheaper than the other and has less chances of correcting in a falling market. Every industry has different PE ratios and it also varies from stock to stock. 260 then the PE ratio is 13.

Opening a Demate account The first step towards investing in stock markets is to open a Demate account. your demat account will be opened in a week’s time and you will receive a booklet containing instruction slips and your beneficiary account number. Passport size colors photograph a copy of the PAN card. A DP ID number will also be printed on the delivery instruction booklet which is the unique identity number of your Depository . Election identity card. Driving License. a Bank or a financial intermediary. To open a Demate account you need to fill up a securities account opening form together with an agreement with the Depository etc) Proof of Bank account (a cancelled cheque or bank statement can be given) A passport size color photograph of the nominee (if appointed) Once these documents are submitted together with duly filled up account opening form. A Demate account is opened with a depository participant. An address proof (Copy of Passport. Ration card. which may be a stock broker. Following documents should be enclosed with the form.

One. 500 per annum for most of the Depository Participants and transaction charges vary from 0. Charges for opening a Demate account There are two types of charges on your Demate account. annual maintenance charges and two.05 percent of the transaction value. 30 per transaction slip irrespective of the value of trade. mostly brokers.Participant. These delivery instruction slips are used to transfer shares from your account to another account. For . Annual charges range from Rs. 100 per annum to Rs. How to choose the right Depository Participant? As far as cost aspect is concerned a Demate account with a broker is much more economical than a Demate account with a bank. You will need these when you sell shares through your broker or when you want to transfer shares to some other person. some Depository Participants. 10 or Rs. transaction based charges.01 percent to 0. charge flat transaction charges like Rs. Some brokers have come out with a lifetime free Demate account where you do not need to pay for annual account maintenance charges.

this saves you from the hassles of filling up and depositing delivery instruction slips with the DP in a very short time. But for the first time investors. you sell 1000 shares at the rate of Rs. brokerage rates should .00. 5. 25 for executing your instruction slip and in case of a Bank they may charge you Rs. I would recommend having a Demate account with the same broker where you have a trading account. the broking house would charge you Rs.e. 200 (i.04 percent of transaction value of Rs.0. Choosing a stock broker and opening a trading account The regular traders and experienced investors look at the lowest brokerage and highest margin while choosing a stock broker. 500 per share then.example. Still.000/-). if you feel more secure with a bank to have your Demate account then it should be with a bank which is most convenient when it comes to deposit delivery instruction slips. in case of your account with a broker. One more benefit of having a Demate account with your broker is that you may authorize your broker through a Power of Attorney to automatically debit your Demate account with him whenever you sell stocks from your holdings in that account.

be secondary and they should look at the research and analysis provided by the broker. Opening of trading account is almost similar to opening of a Demate account. An address proof (copy of Passport. Election identity card. Passport size colors photograph a copy of the PAN card. A good brokerage has a system whereby you get an access to their research team and research reports released by them and a relationship manager is always accessible for your general queries and help. etc. You will need to fill up an account opening form along with agreement with the Broker together with the following documents. The brokerage should not be a deciding factor as initially your volume will not be very high and once you get expertise in trading. Driving License. Ration card. you can shift to a low brokerage broking house.) Proof of Bank account (a cancelled cheque or bank statement can be given) Proof of demat account A passport size color photograph of the nominee (if appointed) Internet trading Internet trading is getting popular for the convenience of trading stock markets without going .

anywhere. The online trading companies would not give you any margin and you will have to transfer entire amount before buying any stock whereas in offline trading brokers generally keep only 20 percent margin and rest can be paid when you buy the shares. ICICI Direct. there are certain disadvantages of having an internet trading account. The biggest . The brokerage charged by the internet trading websites is generally higher than that charged by the brokers offering offline trading. Sharekhan and many other brokerages are providing services of internet trading through their websites. your demat account and your trading account are linked with one another and you can transfer funds from your bank account and buy shares through your online trading account and you can check the status of your holdings online in your demat account and when you sell the shares through your trading account your demat account is debited by the same quantity and the amount realized is shown as a credit balance in your trading account which can be transferred into your bank account or can be used for further buying. However. In an internet trading account your Bank account.

you would want to have the live prices to initiate a trade.disadvantage is the time lag of prices. Do your own research. traditional insurance plans and Government bonds with a return of about 8 percent a year. They had a sour experience because they had not prepared themselves for investing in stock markets. Happy investing Prepare yourself I have seen most of the first time investors losing big money in the stock markets and you would come across a number of such investors with terrible experience in stock markets that they hate to even discuss about any shares and feeling very secure with their money being invested in Bank Fixed deposits. It depends on the speed of the ISP you are using and the type of connection and if your connection is slow the time lag could range from 2 to 5 minutes. they simply saw some other fellow making huge money on some news driven stock and next time put a huge sum on . have a word of advice from your broker and tread forward into the world of financial markets. you would not get live quotes in an online trading account and in stock markets even seconds would matter. Now after opening demat and trading accounts you are ready to do your first trade.

understand them. similarly before buying stocks you must visit the stock markets. Before entering the markets it’s always recommended to spend some time understanding them. But I would . When you go for shopping you spend some time visiting shops in the market to have a look at various designs and prices and then decide which merchandise you want to buy. have a look at various stocks available and then pick one of your choices. Such people do not dare to take another chance and believe that perhaps they are not made for it and resolve not to even look at it during rest of their lives. Get a feel of the stock markets. Well it’s not as easy as writing it or recommending to someone.his advice or saw an expert on a news channel strongly recommending a stock and the markets turned otherwise. actually it’s a tough job even for those who have spent a long time in markets. The experience might have been different if they would have spent some time researching and had some patience before making a first time entry. Some basic steps for the first time investors are listed hereunder which will be useful to make a successful entry into the stock markets and for those as well who had a terrible first time experience.

still maintain that the research done by you is the best. and then you may browse through some good websites to keep . It may not be possible for you to watch TV during office hours. Start reading the daily business papers. In a few days your eyes will automatically be able to catch the price sensitive news in the papers. recent news that Suzlon buys control in RE power pulls the price of Suzlon up by more than 7 percent in a day and sound quarterly results and announcement of bonus shares moved the stock price of NIIT Technologies more than 12 percent in a day similarly a poor show of quarterly results by Punjab National Bank saw its stock price fall by more than 4 percent in a day. and in this world of fast moving information you need to get the news as it is broken. For example. The next stage is to remain updated by watching Business channels as the news you get in newspapers in the morning might have been broken by the channels on the previous day. Spend some time with business newspapers and business news channels. particularly the stock market pages and try to correlate the news on companies to the movement in their stock prices.

the trend of the markets and the overall global scenario. don’t follow street calls blindly.yourself updated. do not panic to invest. the macro economic factors. the technical of the markets. Your first entry should be after a lot of research and it may take a few months waiting for the right opportunity but your first stock should not let you repent on your decision. You may take a tip from a friend or an expert. it becomes very difficult to control your nerves and sit on cash till you discover a dream stock at a dream price. the cycles. Consider all factors. fundamentals and technical of your target stock to make your first move. There is no dearth of opportunities in the markets wait for the next one because in these markets sometimes not making a loss is . Once you allocate some money for investing in stock markets. Do your own research. but research yourself before making an investment and if your own research justifies the decision then go for it and if you think otherwise or you feel uncomfortable with the bargain then don’t go for it. Have patience. Try to do your own research before buying a stock.

D0’s and Don ts in Stock . If you have yet not bought a house. its time to test your skills I know we all hate this. Now when you feel ready to kick off. paying your installments. Always invest in stock markets with the surplus money. premiums for life and health insurance and the EMI of your house. If you are able to set aside an amount after incurring all routine expenses. still it is worth being honest with yourself. And never take a loan for investing in stock markets. Last and most important advice is to make investments in stock markets with the surplus money.also a profit. You will be able to realize when you can make a real portfolio. whatever justification your calculations may give. I would recommend you to do that first before entering the stock markets. Make an excel sheet on your PC and create a portfolio based on the knowledge you have gained including well analyzed tips from your friends and experts and see the performance of your portfolio over a period of time. Create a paper portfolio. then it can be dedicated to the stock markets.

80% of them finish off at the first stage only and after a year or two find that the stock market is not their cup of tea. At times with all the information and luck in his favor. We strongly believe that every investor who comes for trading initially gives losses as he/she is unable to have control over his greed and fear.Trading Every trader loses initially. Now these traders are ready for the 3rd stage. The trader starts to make profits This stage where a trader makes consistent profit i. This cycle of fear of the losses and greed to earn more makes him initially give losses The trader begins to make no profit no loss Out of the total investors who enter the first stage. and then because of his new over confidence. he makes profit. So in the 2nd stage only the 20% investors try to break even in their trading and quite a lot of them are able to have control over their fear and greed with a result that they stop giving losses. trades more which results in his profit gone and also sometimes a portion of his capital gone. In fact this is the stage which .e. he does not give loss cheque to the broker.

* Never limit your orders. * Avoid taking small profits and large losses. * Never trade to scalp a profit. * Only trade active markets. and don't get in when in doubt. Trade at the markets * Extra monies from successful trades should be placed in a separate account. or get in because you are anxiously waiting. (Here you should know your loss you can give in a situation where the trade starts going against you. * Never average a loss.everyone wishes to have in the stock market. * Never get out of the market because you have lost patience. * Never risk more than 10% of your trading capital in a single trade. * When in doubt. . But we strongly believe that anybody who wishes to come to the 3 rd Stage has to pass through the above 2 stages. * Distribute your risks equally among different markets. get out. * Always use stop loss orders. * Don't enter a trade if you are unsure of the trend. * Never let a profit run into a loss.) * Never do overtrading.

* Avoid getting in wrong and out wrong. * Avoid getting in and out of the market too soon. . * Never change your position without a good reason. In the short term it is always the technical factors that are demand and supply of the stock which gives us the directions of the movement of the stock. Investors come to the stock market and buy and sell the stocks eyeing the future. This is making a double mistake. * Never buy or sell just because the price is low or high. * Don't follow a blind man's advice.* Never cancel a stop loss after you have placed it. * When you lose don't blame it on luck. * Don't try to guess tops or bottoms. or getting in right and out wrong. * Never hedge a losing position. The future valuations they arrive at by either calculating the Fundamental factors on the basis of technical they take their positions. * Be willing to make money from both sides of the market. * Avoid trading after long periods of success or failure.

There are two advantages in the following technical firstly. and we follow all the standard technical analysis tools. a stock price reflects everything. They predict the short term movement of the market. In technical we are only concerned with price charts and volumes. technical are not bothered about the fundamentals or the news (it overrides them).Here for the reference of this side. But in intraday trading one has to be very fast and quick and have to be on your toes always. --> If index is in positive from yesterday and the share you are holding is in minus then it should be cut and if intraday trend of index is in buy then one . it tells us where the share/market is moving up or down. we find that people who come here have a more short term view of the market. Day Trding Knowledge It seemingly looks to be the simplest and the most rewarding. Secondly. technical analyst gives better results hence. so there are certain rules which one has to keep in mind. We believe that at any given point of time.

<!--[endif]--> It is not necessary that a stock which is weak today during intraday trading might be weak tomorrow also. <!--[endif]--> !supportLists]-->· <!--[if Always trade in very liquid . <!--[ <!--[]-->· If index is in minus then one should look to short stocks which are minus and not stocks which are in plus. the markets here in all probability will open strong.should buy a stock in which is in plus. so one should be quite careful when buying stocks as the general psychology of public is to buy when good news is there. <!--[endif]--> Being very trading <!--[if !supportLists]-->· <!--[if !supportLists]-->· <!--[if !supportLists]-->· <!--[if !supportLists]-->· Stop loss is a must while trading intraday. <!--[endif]--> contrarians is important while intraday. simultaneously if a stock is strong today might not be strong tomorrow <!--[endif]--> If US Markets have gone up overnight.

e.g. which have very high volume because as entry and exit can be very fast in such stocks.: if you trade in five lots of nifty future then trade in five lots only. <!--[endif]--> Fear and Greed are at maximum levels while trading intraday so always have less position when you are new to intraday trading as otherwise you will be mostly under tension. then shift to actual trading<!--[endif]--> Keep your volume constant e.stocks i. <!--[endif]--> !supportLists]-->· <!--[if !supportLists]-->· <!--[if !supportLists]-->· "Intra day trading strategy is defined as an overall trading strategy characterized by the . This position can be increased only when you are satisfied with your trading for a month. <!-[endif]--> <!--[if Do papers trading before you actually start trading so that when you start making paper profits. It should not be that one day you buy five lots and next day you trade in ten lots and third day you get a loss and stop trading for two days.

Day trading is characterized by multiple intra-day trades executed to take advantage of small price movements in stock." It seemingly looks to be the simplest and the most rewarding.regular transmission by a customer of a multiple intra day electronic orders to affect both purchase and sale in the same security or securities. But in intraday trading one has to be very fast and quick and have to be on your toes always. In the day trading study. There is no "magic formula" that will result in fantastic results. so there are certain rules which one has to keep in mind while doing day trading in Indian stock market or in any stock exchange Most successful day traders are those that have a system or method and stick to it over and over. Most day traders that I know plan their trades around a theory or method they have faith in and continue this process over and over. a day trader is described as "an individual who . Stocks are generally held for minutes or hours and generally positions are closed out overnight for small profits or losses.

With daily chart you have a luxury of time but intraday chart demand immediate action.conducts intra-day trading in a focused and consistent manner with a primary goal of earning a living through the profits derived from trading strategy". There is no overnight risk if a major piece of news hits your market after the close. ADVANTAGES: • • • Trading opportunities are more frequent. if you can trade with daily chart. you will see similar trades more often on intraday chart You can cut losses very quickly. if you stop to think you are dead. DISADVANTAGES: • • • You miss longer term swings and trends Profit are smaller because intraday swings are shorter Expenses are higher because of more frequent commission or brokerage and slippage. HELPFUL POINTS FOR INTRA DAY TRADING: • Keep your volume constant . You must act instantly.

It is not necessary that a stock which is weak today during intraday trading might be weak tomorrow also. What you must NOT do 1.g. If the prices of your shares have plummeted. Being contrarians is very important while trading intraday.e. Accept that. Don't panic.• • • • • e. which have very high volume because as entry and exit can be very fast in such stocks. Don't panic The market is volatile. Always trade in very liquid stocks i. Stop loss is a must while trading intraday. It will keep fluctuating. Others are based on "pivot points" and other advanced calculation. simultaneously if a stock is strong today might not be strong tomorrow With the use of various tool. there is no reason to .: if you trade in five lots of nifty future then trade in five lots only. most of them are based on” range breakouts" or "trend following" systems.

Ditto with your mutual fund does the Net Asset Value deep dipping and then rising slightly? Hold on. When the market dips again. Don't sell unnecessarily. 2. you will average your costs. Don't make huge investments When the market dips. no one can time the market. Pick a few stocks and invest in . When the market dips --buy them. Stay invested if nothing fundamental about your company has changed. Everyone knows that they should buy when the market has reached its lowest and sell the shares when the market peaks. But the fact remains. Keep buying the shares periodically. Instead. But don't invest huge amounts.want to get rid of them in a hurry. Pick up the shares in stages. It is impossible for an individual to state when the share price has reached rock bottom. . buy shares over a period of time. you can pick up some more. this way. go ahead and buy some stocks. Keep some money aside and zero in on a few companies you believe in.

you invest a fixed amount every month into your fund and you get units allocated to you. Don't chase performance A stock does not become a good buy simply because its price has been rising phenomenally. With mutual funds. This could nip into your profits especially if you are selling for small gains (where the price of stock has risen by a few rupees).them gradually. Entry loads and exit loads are fees levied on the . only then make your choice. That does not make it a good fund. Once investors start selling. 3. Track the performance of the fund over a bull and bear market. if you have already paid an entry load. Don't ignore expenses When you buy and sell shares. 4. you will have to pay a brokerage fee and a Securities Transaction Tax. Ditto with a mutual fund every fund will show a great return in the current Bull Run. then you most probably won't have to pay an exit load. Ditto with mutual fund Invest small amounts gradually via a Systematic Investment Plan Here. the price will drop drastically.

when you look at your total equity investments. Similarly with a dud fund. sell the units and deploy the money in a more fruitful investment. If you sell after a year. you pay no tax (long-term capital gains tax is nil). you could consider selling them.Net Asset Value (price of a unit of a fund). Diversify Don't just buy stocks in one sector. Even if they are not going to give you a substantial profit. Entry load is levied when you buy units and an exit load when you sell them. 2. it is time to dump them and utilize the money elsewhere if you no longer believe in them. Get rid of the junk Any shares you bought but no longer want to keep? If they are showing a profit. If you sell your shares of equity funds within a year of buying. Make sure you are invested in stocks of various sectors. you end up paying a short-term capital gains tax of 10% on your profit. What you MUST do 1. Also. don't just look .

consider investing in it. post office deposits. To balance your equity investments. Tread cautiously. don't over-exceed that limit because the stock market . Are you happy with the way a particular fund manager manages his fund and the objective of the fund? If yes. put a portion of your investments in fixed income instruments like the Public Provident Fund. Stick to your strategy If you decided you only want 60% of all your investments in equity. Believe in your investment Don't invest in shares based on a tip. 3. Look at the fundamentals. Look at equity funds as well. consider a balanced fund or a debt fund. 4. bonds and National Savings Certificates. Analyze the company and ask yourself if you want to be part of it. Invest in stocks you truly believe in. no matter who gives it to you. If you have none of these or very little investment in stocks.

2. Establish a plan and define specific risk and profit objectives . 4. The basic property of any asset class is to grow. 11. Avoid loss-making companies.has been delivering great returns. Stocks are an asset class. Only buy fundamentally strong stocks. Stocks have been the high yielding asset class over the past. 5. 3. Invest in companies with proven management. Invest in stocks for sure returns. 7. 13. Never chase a stock. Stick to your allocation. 8. Invest a fixed amount each month. 9. 6. PE Ratio and Growth in earnings per share is the key. 12. Buy stocks grown in top line and bottom line over the past years. which are undervalued. 14. Look for the dividend paying record. 10. Buy when everyone is selling and sell when everyone buys. Buy when markets are in the grip of panic. General Market Advice: 1. The Stock Trading Plan: 1.

A trader must be able to admit they have made a mistake. An investing edge is only part of the equation. over time you will be successful. Do not become emotionally or financially committed to a losing trade. and there is no trading system that is 100% accurate. There is no "sure thing". 4. Successful traders will agree that discipline contributed more to their success than their trading philosophy itself. however small. A trader should diversify sufficiently so that the . 3.before trading. rather than on hunches and long shots. If you can develop an edge. is to use the tools available and try to develop an edge. Base your trades on sound fundamental and technical reasoning. Avoid the pitfall of becoming emotionally involved with any trade. Maintain the necessary discipline to follow that plan through both good and bad times. Your goal. 2. Remember that the key to any plan is how well it holds over time. as a trader.

Even if the trader has a perceived investing edge. 6. 5. Fundamental trading wisdom dictates the exact opposite. The trading axiom is. but also to be able to continue to make money consistently for an extended period of time. be patient and fully capitalize on the success. and bet it alone one trade. complicated and stressful in order . "cut your losses short and let your profits run". A trading system does not have to be difficult. When in a winning trade. Lack of experience in the market causes many traders to make the mistake of taking small profits and letting losses run. it is unwise to run the risk of ruin. time consuming. The lower the percentage of a trader’s account dedicated to any one trade the greater the chance of the trader being successful. The goal is not only to make money.growth in equity can be consistent and the likelihood of a catastrophic loss can be diminished. A trader must learn the basic concepts and the importance of money management.

be cautious. Remain true to your trading plan and follow the trading style that works best for you. Do not make trading decision based solely on margin requirements. As a trader. Never make a trading mistake without asking yourself why. 9. Be aware that declining volume usually indicates the market is not accepting higher or lower prices. and always trade within your capabilities. as in many other things in life. 11. Trade with confidence and conviction Trade . In trading systems. 10. Learn from your trading mistakes. and never let greed take control of a winning position. 8. Do not trade markets that you don’t be profitable. simple can be better 7. and this could indicate a market turn.

Do not make a trading decision to buy just because the price of the stock is low or sell just because the price is high. 13. Divide your capital into 6 equal parts and never risk more than one-tenth of your capital on any one trade. and be aware of the risk of losing. 12. Conversely. Avoid getting into the market because you are anxious from waiting and/or out of the market because you have lost your patience. Never increase your trading after a loss. use selfdiscipline when a trade goes against your position. Take your loss and wait for another opportunity. After a long period of success or a period of profitable trades. Never over trade and adhere to your risk management rules 14.only with risk capital. try to avoid the natural tendency toward increasing your trading activity. Never change your position in the market without a good reason that is based on a fundamental or technical rule indicating a change .

If you are in doubt. 16. . When the market is moving with your position and you are using a stop loss order. Protect yourself against the possibility of turning a profit into a loss." and never buy and sell if you are insecure of the trend according to your fundamentals and technical rules. Trade in five or six different stocks at a time. trend. The "trend is your friend. Only trade when you feel confident with your trading strategies. and then raise your stop loss so as to lock in your profit. so as to avoid tying up all of your capital in any single stock. Trade "at the market" whenever possible and try to avoid a fixed buying and selling price. 17. Trade the most active stocks and refrain from trading the slow moving markets. 18. then exit the market.

A trader should establish a "surplus account" after a series of successful or winning trades. There are no hard and fast rules on what makes a successful stock trader. instead let the market prove its top and bottom. And just because you feel confident and comfortable trading stocks.19. The goal is to retain the "surplus account" for times of emergency or panic 20. It is difficult to try and guess where the top and bottom of the market is. Successful Traders Use Successful Trading Techniques What are the successful trading characteristics of today's successful traders? Some people are very comfortable doing stock analysis and some are not. it doesn't necessarily mean you will be good at it. yet there are several characteristics that those who make the most amount of money in the least amount of .

Patience means knowing how to be resilient. and disciplined when the markets go against you. They expect to have losses and know when to cut them as soon as they are recognized. a trader must be patient. Successful traders are highly disciplined. A successful trader let’s winning positions run. 4. 1.time all have in common. courageous. The biting desire to succeed can make all the difference in educating yourself about what you want to know and sticking to your strategy when the going gets rough. 2. The successful trader is passionate and has a biting desire to succeed. Developing skill in both fundamental and technical analysis is suggested. 3. potential embarrassment is not a concern with successful traders. 5. Discipline also means sticking to your strategy. even if he isn't in the mood. Extremely disciplined a successful trader does what needs to be done. As they practice stock trading. but is able to swallow his pride and close the trade when it isn't working. The exploration of stocks is a key ingredient to becoming a successful trader. . To be successful.

Successful traders know that mistakes are going to happen. A winning trader knows the difference between defensive and offensive behavior. 10. They realize and appreciate that the ability to make their own mistakes is a necessary part of the learning process. Greed and fear should not affect your decisions. a successful trader can break away 'at will' before putting too much at risk.not suddenly buying or selling on a whim. 6. 8. To be victorious you have to be able to resist the urge to prove you are right and be ready to make mistakes. profit later. and when to use each .protect your money first. 7. 9. Stock trading can be addicting. Setting stop losses on every trade is something that . even if they have to admit they made a mistake. Getting emotionally involved or placing trades based on hunches or rumors are not characteristics of successful traders. Successful traders are risk adverse. Successful traders balance their lives. They don't like losing money and control themselves before losing a large quantity. or because of a" hot tip".

you will have to admit that you are wrong. Strategies for day trading Basic Rules: .Select a few stocks only. your ego and your portfolio will survive and you may be able to get back into your "pet" position again when trends tell you it is the appropriate time to do so.promotes success in trading. Although you might miss the lowest entry points and the top selling points.Watch the general sentiment (Index . You will have to learn to disregard any emotional ties you have to your stock and make quick stock trends your master. . you will be able to sleep at night and look at yourself in the mirror in the morning. Learning to get out of a stock position before your profits turn to losses becomes a necessity.If you are already holding the stock wait for the peak or the bottom . By using stop loss strategies correctly.Select liquid stocks only. This means that on more than one occasion. Learn solid stock investing concepts. .

Place stop loss orders in a highly volatile market after long or short trades Strategies: Trade on unknown trends: When the market opens trade on a stock based on the previous day’s movements. Partially or fully cover the trade within half an hour Trade on known trends: When the market is about to close (half an hour before) trade on a stock based on the day's movements Trade on resting stocks: Stocks which have risen/fallen substantially will take rest for some time.Don't be over enthusiastic.Support/Resistance) . .Never challenge the market. Wait for correction and buy. In a bear market falling stocks will fall further. Watch it and trade Trade when trends are known: In a bull market raising stocks will raise further. . .

Trade on dates: Stocks rise/fall prior to announcement of results. Instead of selling a stock with previous days up trend. Have knowledge on this date which will help in making . Trade on appetite: If you think that you have made enough profit/loss stop trading. Trade on previous trend: Instead of buying a stock with previous days declining trend. it will be prudent to buy a stock with previous day’s uptrend on declines. When the news is unfavorable and the stock has fallen considerably go long.Wait for up move and sell. Trade on news: The general philosophy is to buy on rumors and sell on news. Trade after trails: Start with small lots and go for volumes after enough study. it will be prudent to sell a stock with previous days downtrend on up move. When the news is favorable and the stock has risen considerably go short.

Trade on volumes: Rising/Falling Stocks which shrink in volume indicate that the run is nearing final state. but talent will only take you so far. charts and ratios. Step1. Tricks of the Successful Trader For all of its numbers. you might just find some tips that will help you make smarter. Watch for change in trend. Define your goals and then choose a style of trading that is compatible with those goals.decisions. trading is more art than science. Consequently. And just as in artistic endeavors. too. it is imperative that you have clear goals in mind as to what you would like to achieve. Before you set out on any journey. for the experts out there. more profitable trades. They perform self analysis to see what drives their trades and learn how to keep fear and greed out of the equation. In this article we'll look at nine steps a novice trader can use to perfect his or her craft. you then have to be sure that your trading method is capable of achieving these goals. it is imperative that you have some idea of where your destination is and how you will get there. Each type of . The best traders hone their skills through practice and discipline. there is talent involved. Be sure your personality is a match for the style of trading you choose.

You must know each broker's policies and how he or she goes about making a market. On the other hand. or a good platform with a poor broker. Choosing a reputable broker is of paramount importance and spending time researching the differences between brokers will be very helpful. which requires a different attitude and approach to trade successfully. A good broker with a poor platform. Know your broker's policies. For example. if you cannot stomach going to sleep with an open position in the market then you might consider day trading. In choosing a broker. For example. be sure the broker's platform can draw Fibonacci lines. . It is important to choose a broker who offers a trading platform that will allow you to do the analysis you require. Step3. Also make sure that your broker's trading platform is suitable for the analysis you want to do. then a position trader is what you want to consider becoming. But no matter what style of trading you choose. trading in the over-the-counter market or spot market is different from trading the exchange-driven markets. if you have funds that you think will benefit from the appreciation of a trade over a period of some months. if you like to trade off of Fibonacci style requires a different approach and each style has a different risk profile. be sure that your personality fits the style of trading you undertake. Make sure you get the best of both. it is important to read the broker documentation. Choose a broker with whom you feel comfortable but also one who offers a trading platform that is appropriate for your style of trading. For example. A personality mismatch will lead to stress and certain losses. can be a problem. Step2. Choose a methodology and then be consistent in its application.

Your system should keep up with the changing dynamics of a market. What shows up as a buying opportunity on a weekly chart could. Choose a longer time frame for direction analysis and a shorter time frame to time entry or exit. show up as a sell signal on an intraday chart. You should go back in time and measure all your trades that were winners. Step4. whereas chart patterns may offer trading opportunities in the short term. be sure to synchronize the two. Some people choose to look at the underlying fundamentals of the company or economy. Many traders get confused because of conflicting information that occurs when looking at charts in different time frames. Then . Keep your timing in sync. you need to have some idea of how you will make decisions to execute your trades. as a result they will only use charts to time a trade. Therefore. And be sure your methodology is adaptive. Whichever methodology you choose. if you are taking your basic trading direction from a weekly chart and using a daily chart to time entry. if the weekly chart is giving you a buy signal. Remember that fundamentals drive the trend in the long term. versus all your trades that were losers.Before you enter any market as a trader. Others use technical analysis. wait until the daily chart also confirms a buy signal. and then use a chart to determine the best time to execute the trade. Calculate your expectancy. Expectancy is the formula you use to determine how reliable your system is. remember to be consistent. In other words. in fact. You must know what information you will need in order to make the appropriate decision about whether to enter or exit a trade. Step5.

determine how profitable your winning trades were versus how much your losing trades lost. Take a look at your last 10 trades. If you haven't made actual trades yet, go back on your chart to where your system would have indicated that you should enter and exit a trade. Determine if you would have made a profit or a loss. Write these results down. Total all your winning trades and divide the answer by the number of winning trades you made. Here is the formula: E= [1+ (W/L)] x P – 1 where: W = Average Winning Trade L = Average Losing Trade P = Percentage Win Ratio Example: If you made 10 trades and six of them were winning trades and four were losing trades, your percentage win ratio would be 6/10 or 60%. If your six trades made Rs2, 400, then your average win would be Rs2, 400/6 = Rs400. If your losses were Rs1, 200, then your average loss would be Rs1, 200/4 = Rs300. Apply these results to the formula and you get; E= [1+ (400/300)] x 0.6 - 1 = 0.40 or 40%. A positive 40% expectancy Step6 Focus on your trades and learn to love small losses. Once you have funded your account, the most important thing to remember is that your money is at risk. Therefore, your money should not be needed for living or to pay bills etc. Consider your trading money as if it were vacation money. Once the vacation is over your money is spent. Have the same attitude toward trading. This will psychologically prepare you to accept small losses, which is key to managing your risk. By focusing on your trades and accepting small losses rather than constantly counting your equity, you will be much more successful. Secondly, only leverage your trades to a

maximum risk of 2% of your total funds. In other words, if you have Rs10, 000 in your trading account, never let any trade lose more than 2% of the account value, or Rs200. If your stops are farther away than 2% of your account, trade shorter time frames or decrease the leverage. Step7. Build positive feedback loops. A positive feedback loop is created as a result of a well-executed trade in accordance with your plan. When you plan a trade and then execute it well, you form a positive feedback pattern. Success breeds success, which in turn breeds confidence - especially if the trade is profitable. Even if you take a small loss but do so in accordance with a planned trade, then you will be building a positive feedback loop. Step8. Perform weekend analysis. It is always good to prepare in advance. On the weekend, when the markets are closed, study weekly charts to look for patterns or news that could affect your trade. Perhaps a pattern is making a double top and the pundits and the news is suggesting a market reversal. This is a kind of reflexivity where the pattern could be prompting the pundits while the pundits are reinforcing the pattern. Or the pundits may be telling you that the market is about to explode. Perhaps these are pundits hoping to lure you into the market so that they can sell their positions on increased liquidity. These are the kinds of actions to look for to help you formulate your upcoming trading week. In the cool light of objectivity, you will make your best plans. Wait for your setups and learn to be patient. If the market does not reach your point of entry, learn to sit on your hands. You might have to wait for the opportunity longer than you anticipated. If you miss a trade, remember that there will always

be another. If you have patience and discipline you can become a good trader. Step9. Keep a printed record. Keeping a printed record is one of the best learning tools a trader can have. Print out a chart and list all the reasons for the trade, including the fundamentals that sway your decisions. Mark the chart with your entry and your exit points. Make any relevant comments on the chart. File this record so you can refer to it over and over again. Note the emotional reasons for taking action. Did you panic? Were you too greedy? Were you full of anxiety? Note all these feelings on your record. It is only when you can objectify your trades that you will develop the mental control and discipline to execute according to your system instead of your habits.

Bottom Line
The steps above will lead you to a structured approach to trading and in return should help you become a more refined trader. Trading is an art and the only way to become increasingly proficient is through consistent and disciplined practice. Remember the expression: the harder you practice the luckier you'll get.

Momentum Trading:
Momentum trading seems to have many followers and equally many skeptics and cynics but we must first define exactly what momentum trading is and its advantages and disadvantages in order to form an educated

Momentum trading merely says every year there are a small number of stocks that go on to gain 500% . This can easily be seen by going to one of the many free stock screeners and typing in the parameter that displays stocks that have gained at least 500% over the year. Depending on the state of the overall stock market will depend how many stocks show up in this search. and going on to make 500% + moves. Simply cut your losses quickly on the losers and ride the winners for as long as they keep heading in the right direction. Let’s say every year there are 30 stocks that go onto make a 700% move in the stock market. What if we can jump on these stocks when they have put in a 400% move for the year? So to jump on board a momentum stock simply identify which stocks have already put in a sterling performance for the year. For many they will look at a . unknown stocks. Buy into them and hope they keep powering on. Let’s go right back to some good old common sense. Even during the worse bear market I can recall (2000 –2001) there are still dozens of small cap. Some will and some will not.1000%+ moves in the stock market.opinion.

You can pick two equally great looking stocks. which has already gained 400%. and say it has gone too far. Why? You have no way of knowing which stocks the market will or will not fall in love with.stock. Another advantage with momentum trading and one severely overlooked is the speed at which profits are made. Greed and fear are the emotions that always have and always will destroy your stock market profits. All the fundamentals in the world cannot give you a better chance than flipping a coin. Did you know the fastest movement in a trend is in the last quarter? You do now. Trends start slowly and gather . Are you willing to take this risk? Trying to pick a bottom is greed. Both with fantastic earnings and prospects One will languish the other will go no to make stellar returns. You want it all. They have been taught buy “stock guru" to buy low and sell high. This sounds great but in practice it is a losing strategy. You are not happy with making a 200. They would rather get in at the bottom and ride the stock from 0 to 400%. It’s all very well making an 800% return on a stock you made but it’s that great a return if it took six years to make it.300%+ gain but you want more.

a series of points are derived. The pivot point is the level at which the market direction changes for the day. The pivot level. which rises from Rs 10 to Rs 300. The movement from Rs 70 to Rs 300 will be in about 1/10 of the time it took for the stock to go from Rs 10 to Rs 70. A stock. low and close. Pivot Point Trading You are going to love this lesson. will see its fastest move from about Rs 70 onwards. slower moving start of trends and this is exactly what momentum stock trading is all about. This was a nice simple way for floor traders to have some idea of where the market was heading during the course of the day with only a few simple calculations. Using some simple arithmetic and the previous days high. support and resistance .momentum as they continue. It is much better to jump into the tale end of a large trend than catch the smaller. Using pivot points as a trading strategy has been around for a long time and was originally used by floor traders. These points can be critical support and resistance levels. Think about this.

Every day the market you are following has an open. The reason pivot points are so popular is that they are predictive as opposed to lagging.levels calculated from that are collectively known as pivot levels. the formula I use is below: Resistance 3 = High + 2*(Pivot Low) Resistance 2 = Pivot + (R1 .S1) Support 3 = Low .(R1 . If you would rather work the pivot points out by yourself. This gives you an opportunity to trade.Low Pivot Point = ( High + Close + Low )/3 Support 1 = 2 * Pivot .Pivot) As you can see from the above formula. Because so many traders follow pivot points you will often find that the market reacts at these levels.S1) Resistance 1 = 2 * Pivot . just by having the . high. You use the information of the previous day to calculate potential turning points for the day you are about to trade (present day).2*(High . low and a close for the day as this information basically contains all the data you need to use pivot points.High Support 2 = Pivot .

By the time the market reaches R2. The general idea behind trading pivot points is to look for a reversal or break of R1 or S1. Are You a Newbie Trader? Day trading online is not an easy profession. S1 and the actual pivot point. If the market opens below the pivot point then the bias for the day is for short trades. A perfect set would be for the market to open above the pivot level and then stall slightly at R1 then go on to R2. R3 or S2.previous days high. If the market opens above the pivot point then the bias for the day is long trades. 3 resistance levels. S3 the market will already be overbought or oversold and these levels should be used for exits rather than entries. 3 support levels and the actual pivot point. The three most important pivot points are R1. You would enter on a break of R1 with a target of R2 and if the market was really strong close half at R2 and target R3 with the remainder of your position. low and close you eventually finish up with 7 points. You might be stuck in .

It's as simple as that. 7. By the time it appears on television. and when things get serious. With a lot of people watching. CNBC is fun to of the common pitfalls that often devour newbie day traders. 8. you use your gut feeling instead of calmly assessing trading market conditions using technical indicators and trading software and selecting high probability day trades. CNBC has a very specific job: To provide enough entertainment to viewers so they tune in and watch. You cannot make a living "trading the news" off of any financial news channel. it is way too late to react. Day Trading the News:You are glued to CNBC for your next day trading stock tip. Find out if you are still a newbie trader. . they make more money from the commercials. The Gut Trading Indicator: When you are day trading. they do a great job reporting. The Gold Rush: You think day trading means that you can make a lot of money in a short amount time. 6.

Your day trading P&L for the day: -45 pips. I was right all along. it pulls back. You are hoping to make a profit. You think. 4. If a certain trading price is going up and the puts are in a long position. You do not examine the charts from all time frames. the news does not provide day trading tips. 5. you do not understand the direction of the overall market trend.Trading floors have already heard the news and by the time it makes it to the public they are closing their positions. the price doesn't up. the trading price resumes it seems like an uptrend. Day Trading Slacker: You do not do you homework before the next day trading session begins. ideally to suckers who just saw the headlines. Well. Trading Market Chaser: You continue to chase the trading market. Suddenly the trading price pulls back. . All of a sudden. you start to get nervous and get out of the day trade with a 20 pip loss. guess what. "Wait a minute this is easy. and ends at a 25 pip loss." You add in a second long position to try and make up for the 20 pip loss.

Trading is a profession. Day Trading Cowboy: You continue to think that you can learn by day trading by yourself. 3. Therefore you have no idea which indicator fits your personality and day trading style the best. You trade multiple lots and you think that it will result in a big pay off at the end of the day. become a billionaire and fly away to Tahiti. crack this system. The Player: You have indicator commitment issues.You have no idea if employment numbers are about to be released or any other announcements so that you may prepare to handle the trading market correctly. Day Trading Overachiever: You day trade way too much. Sure you know little about them all. 2. but you don't know a lot about any specific indicator. you will find the secret code. You jump from one trading indicator to another. someone who is already a professional and a . 1. Most successful traders learn from a day trading mentor.

successful day trader. I couldn't just watch an operation on TV and expect to succeed when I tried my next angioplasty. many day traders find themselves losing due to poor day trading money management. It is probably the safest form of investing. only to have a big loser wipe out 50% of my gains. I can not tell you how many times early in my trading career. How Much Should You Risk The size of your trading position is in direct proportion to the value of your portfolio. that I would be up huge over a 5-day period. . usually with years of experience. to avoid this bad habit. as you are focusing on a small number of positions. The key to day trading success is to avoid big losers. Why should trading be any different from any other profession Day Trading Money Management Day trading as a business can be very profitable. you are not holding any positions overnight and you are able to enter and exit trades with pinpoint accuracy. If I wanted to be a doctor. However. So.

You simply want the total dollar amount invested per position. 000 you use only represents 12. and just put a 1% stop loss out there and when that is hit. they just take the loss.5% of your margin able equity. and should use Rs50. If you have put on around 1.000 day trades or more. if your account value is Rs100. to equate to 12. and does not operate in the realm of gray. let me try to say that a little easier. you know all too well that a 1% loss can happen. Now that I have confused both of us. 000 dollars in margin buying power. you should allow yourself to take a 2% hit on your position. Yes.5% of your total margin able equity. 000 you will have Rs400. This way if you take a 2% hit. in order to avoid taking constant hits. Remember. So. you need a . where the dollar loss from this trade will only represent 1% of your overall account value. 000 for each trade. this Rs50. Most traders take this rule of thumb. Stops are not meant to be hit It really upsets me when I hear so called professionals advice new traders to set stop loss amounts. it will only be 1% of your total account value. So. Doesn't that seem like a general rule? Trading is a game of should only risk a total of 1% of your portfolio on any one trade.

and it is not your goal to have this stop hit.5% losses. The minute you see that the trade is wrong. have a much higher success rate than traders that start out . Operate in Cash Day trading is a cash business. Again. but it is a fail safe.stop loss order for every trade. get out with small hit. This is how you will win the game. In this article we have discussed the power of a 2% stop rule and overall day trading money management. the 2% stop loss is for the unexpected sharp counter move. if you have to take out loans. credit. or use part of your retirement to get in the game. the goal here is to see a small number of . while your winners are in the range of 1%-3%.25% or . The only loan you should be using is with your day trading margin buying power. But do you think you should let every losing trade hit your stop? Of course not now I am not suggesting that we all become rogue traders and trade without stops. Because in the end. Traders that operate with a positive cash flow and utilize day trading money management rules. have a much higher success rate and utilize day trading money management rules. You should know well before your stop is hit if you are in a bad trade. Do not start or continue to day trade.

breakout means a lot of things to a lot of people. I will make money. immediately contact your broker. how did this happen? My technical indicators were in alignment. . now when I put on my short position. soy latte? Well. right? If you believe this the red. weekly highs. If you are ready to end your streak of tough trading days. Often times professional floor traders and the like will wait for stocks to break new lows. withdraw your funds and put them in a savings account. what comes to mind? Stocks making daily highs. why do so many people lose money day trading breakouts? Why are traders constantly buying stocks when they hit intraday highs. in this article I will give you the "secret" that so many breakout day trading professionals use everyday to take themselves from ordinary to extraordinary. How many times have you shorted a stock on a breakdown through a critical support level. come back and see the stock has bounced and you just bought a five-thousand dollar no foam. Asking yourself the question. go get coffee. If you follow this system. only to have them rollover within minutes. the stock has the bounce of its life. The last 15 bars have been down. The stock has been below its simple moving average the last 10 bars. you will lose money. This will leave you the novice trader. look for large buy orders in the tape and then start scooping up every share in sight. So. two-day highs. looking at your screen scratching your head. all-time highs as you see. continue reading. What are Breakouts? When you think of day trading breakouts. Biggest Misconception about Day Trading Breakouts If I buy a breakout or sell a breakdown.

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