Online Stock Trading

2008-07-13T10:46:00.001-07:00

The stock market has become the scene for those individuals who have learned to build a strong portfolio with online stock trading. Most investors keep an eye out for stock that is rising however, some experienced traders are spending their time finding stock that is on the brink of dropping. This type of stock trading is known as selling short. There are a couple of reasons that an investor would want to sell a stock short when online stock trading. One reason is that a stock will drop in price about three times faster than it took to increase in price by the same amount, meaning faster profits. Another reason is that many stocks run in cycles due to various economic and seasonal conditions. This means that traders can take advantage of all the moves a stock has at hand when online stock trading. Selling a stock short is the exact opposite as buying and holding stock when investing in stock. Instead of the more traditional method of buying stocks and profiting from the share price gaining in value, it is actually profiting from a stock falling in price. When one sells short they expect the share price to lose value and profit from the decline in price when online stock trading. Please note that when you sell a stock short, you are borrowing the shares from your broker. If after reading this, you decide to begin trading stocks short, you must first open a margin account. When new to online stock trading, start low with lots of shares such as 100, and avoid jumping in with orders for 1000+. Mentally, at first, a trade with 100 shares going against you is easier to take than one with 1000 when trading stocks.When online stock trading, you must know where your exit points in the trade will be, including your stop loss value. It is important to take losses and not let a losing trade run away while you hope it will turn in your favor later on. It’s very possible that it may not.

Indian Stock Market Trading Golden Rules

2008-07-13T10:42:00.000-07:00

We are mentioning few golden rules for trading and investing in Indian stock market or in any other Stock market.
If you want to be a successful intraday / day trader or Positional / Delivery investor then simply follow these golden rules.
"Trading runs in cycles; some are good, some are bad, and there is nothing we can do about that other than accept it and act accordingly"
Think in terms of probabilities and act upon them. There are no certainties in trading. You can keep yourself out of trouble by thinking in terms of probabilities. Get comfortable with approximate predictions and interpretations.
"To trade/invest successfully, think like a fundamentalist; trade like a technician"
Along with economic fundamentals that will drive a market higher or lower, but we must try to understand the technical as well.
"Don't be a hero. Don't fight the trend. Follow the money flow"
You should forget the news, remember the chart as chart already knows the news is coming and buy on rumors; sell on news.
"In trading/investing, an understanding of mass psychology is often more important than an understanding of economics"
Trading is a psychological game. Most people think that they're playing against the market, but the market doesn't care. You're really playing against yourself. Hope, fear and greed are not strategies: they are emotions. Simple emotions are not an effective strategy. Positive emotions could cause us to fail to apply risk precautions. Negative emotion could cause us to hesitate.
"Learn to monitor yourself and draw conclusions from your mistakes. "
Predetermine maximum losses in every potential trade. Do not risk more than 5% of your capital on any trade. Don't average your losses.
"Buy that which is showing strength - sell that which is showing weakness"
The public continues to buy when prices have fallen. The professional buys because prices have rallied. This difference may not sound logical, but buying strength works. The rule of survival is not to "buy low, sell high", but to "buy higher and sell higher". Furthermore, when comparing various stocks within a group buys only the strongest and sells the weakest.
"Think like a guerrilla warrior."
We wish to fight on the side of the market that is winning, not wasting our time and capital on futile efforts to gain fame by buying the lows or selling the highs of some market movement. Our duty is to earn profits by fighting alongside the winning forces. If neither side is winning, then we don't need to fight at all.
"When you lose, don't lose the lesson!"
Forget the names but remember the events. Those who don't remember the past are doomed to repeat it. Make mistakes with composure and character, without blaming others, and don't dwell on mistakes.
"Evaluate your results at least monthly".
Monitor your P&L, your win/loss ratio, and the relationship between your biggest wins and worst losses. Reviewing these results helps you continually improve your understanding of the markets and yourself.
"When in doubt, get out."
Scrutinize your positions at all times, each day, and you will not be left holding a stock without reason. Be willing to change direction at any time, because your flexibility as an individual investor is a big advantage which should be embraced!