1) Consider Stock Market as a money losing machine but not as a money making Machine.
It means you should be much concerned about protecting your money while doing intraday trading. If you try to stay in market with the intention not to lose, in long run you will learn too many things and later you will start earning from market.
2) Never deviate from your own designed strategy.
No matter how frustrating or rewarding situation seems you should not deviate from your own strategy that you have designed based on your trading experience.
Yea you may update your strategy if your find something better during your trading experience.
3) Never forget to use stop loss .
If you use stop loss it’s guaranteed that you will never lose huge money. Stock market is not about making money but it’s about being in the market without losing money.
4) Trade in winning situation.
Trade only when you find your strategy fits suitable in market condition. You don’t have to trade daily and every time. Trade in winning situation and rest of the time observe the market moves and learn from it.
5) Stop trading when few trades in very beginning goes wrong.
Someday once your few trades in the very beginning goes negative then you assume that market is not going as per your perception today so it’s better to stop trading.
On the other hand you will observe that someday if your few trades in the beginning goes profitable then rest of trade in whole day will go profitable. If it happens then you should assume that today market is trading as per your perception.
6) Trade in your comfort zone as per your financial condition and trading experience. Never over trade nor use margins much.
Trade with that much size and price with which you are comfortable as per your financial condition and trading experience.
Trade in such a way that after being in a position no matter how market goes negative or positive your heart beat should be normal.
7) Never trade against the trend.
Check global index, country index, sectorial index, peers then individual share and news regarding that stock.
8) Book small small frequent profits.
This is the important mantra of intraday trading. Brokerage charges is very less as compared to profit so don’t hesitate in exiting the trade in small profit.
It preferable to book small small profit so frequently instead of waiting for huge profit.
The intention of intraday trading should be make money from each small moves of market.
9) Listen to market but don’t tell.
Because in intraday market moves more on the sentiment of traders and less on the business fundamental.
I have seen stock price of a company rising on a particular day when it’s quarter result was announced and result was too bad. But price rose because on that day market sentiment was positive about country index and sectorial index.
10) Never be 100% sure , Anything can happen.
Never put huge money so that if trade goes negative you lose everything. No matter how exhaustive research you have done but your are not the only one. So always be protective in market.
11) Never be greedy.
No matter how alluring market appears but trade according to your financial health and experience only.
You should not forget that the moment you find market rewarding at the same moment the person sitting on the other end find the market frustrating that’s why your trade executes.
12) Never do averaging on negative side.
This is just a one’s psychological weakness.
If you are so sure about u-turn of market price then why don’t you exit and place fresh order.
13) Never touch un-researched stock.
No matter how alluring others stock seems you should never touch the stock that is not the part of your research.
14) Don’t touch high priced stock.
For different person high price may be different.
The psychology behind this is you feel more panic in high priced stock.
If 5 rupees stock falls to 4 ,it has fallen 20%,while if 50000 rupees falls 20% price will fall to 40000.
For a normal trader he will be highly panic to see 10000 loss in single share.
The fact is if your trade 10,000 shares * 5 rs/share=50000
or 1 share * 50,000 rs/share= 50,000
loss of 20% will lose 10,000 in each case but since Psychology plays role in trading so you will be more panic in high priced share in adverse situation.
15) Never do trading on money loaned from someone, neither on survival money.
You should feel confident while trading that can happen only when you are trading with your own money.
Today or tomorrow you will come to know psychology plays a huge role in trading and loaned money affects your psychology so badly.
16) Never use recommendation from others.
I am not telling that all recommendations are wrong, some good researchers are there in the market but you can’t tackle the trade if solely doing based on recommendation since you are not aware about thought process.
If the researchers teach you thought process for recommendation then welcome them warmly.
17) Never go with Obvious kind of situation.
Because the things that are obvious to you are obvious to others also.
18) Never go with the stock in news.
Chances of making or losing amount will be huge. No issue with making but you will wiped out in losing case.
19) In rally Go long with stock that is fundamentally strong and in crash go short with stock that was already performing bad. Reason is very clear.
20) Don’t Lose your mind stay controlled and disciplined.
While doing trading sometimes you become too much greedy when you find winning situation but at the same moment you forget that same situation is appearing at the terminals of other traders and in intraday it’s itself a rule until unless your moves are not exceptional you can’t make money.
similarly when you find your trade is going negative you start doing something like sell/but too frequently to recover your loss. So don’t lose your mind and stay disciplined no matter how market moves.
Many people suggest yoga and meditation and many other people ignore that suggestion but the fact is trading is a very challenging art where one needs to have full control over his mind that you can achieve only when your are mentally healthy. For physical health exercise is must in the same way for mental health yoga meditation is must.
21) Research Your losses.
No matter how perfect your try to be, there are always chances that you may suffer losses.
In that case investigate your thought process that you had before placing the order and exiting the trade and if you could find some mistakes then note it down in bold letter and try to minimize that mistake.
If you can’t investigate then you need to learn more about market so start learning rigorously.
If your investigation find something new then add this new thing in your strategy.
(*) Keep learning on daily basis. Technical and Fundamental analysis both. Join some good courses and do some certification like CFA, NCFM,NISM etc. Which will keep your skill enhancing in Stock Market.
(*) Keep studying one book on Trading Psychology since Trading is a pure psychological game that you will surely realize while trading.
(*) Once you are comfortable with technical then start learning fundamental analysis. Till now no one has made huge money in trading. Money is made in long term investment with the approach like To buy a house with intent to live in. The biggest trader George Soros is far far away from Warren Buffet.
Trading is just an art to make money with some technical tools it’s not at all business because while trading you never care about fundamental of company. While Investment is the biggest business over this planet by which one can supervise the all possible businesses on globe and reward or punish them by buying or selling the stocks of that company.
This definition of Investment is not a formal definition but just to give emphasis on the importance of Investment.
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