What should you know before Trading !!

I am compiling whatever i know into this post so that one does not need to go through various other articles in order to learn the “How to’s about this topic.

Trading :

Day trading/ Intraday trading ->

While doing “Intraday trading”, a person needs to be on his/her toes more than any other sort of trading.

It is known as “Intraday trading” because the position must not be carried overnight.

If a person does not get enough time to sit in front of the screen during the market hours due to the job or anything else even for 1 hour then it is not for them.

This trading style requires more focus, sharpness, nerves of steel, patience, persistence, discipline, learning, knowledge, control on emotions and quick decision making.

People with good capital can still survive longer and try to find their edge in terms of "Trading strategy" but many people take leveraged trades due to shortage of cash in hand.

Leveraged trades amplify “Return on investment” but also increase the “Risk per trade”.

A lot of successful traders say that one should not risk more than 2 % of their capital in 1 trade.

If a person is trading in the derivatives market and assuming risk per trade in this segment can easily be 3000 rupees then one would need a capital of atleast 1.5 lakhs for trading.

Otherwise, if you want to trade in the "Cash segment" you can allocate whatever capital you are comfortable with and just manage risk.

From my experience “5 Minutes” time-frame suits well for this kind of trading.

BTST/ STBT (Buy today sell tomorrow or Sell today buy tomorrow) ->

The suited time-frame for this style of trading is “15 Minutes”.

The idea is to identify the stocks which can be sold today and bought tomorrow at the lower price to make profit or to identify the stocks which can be bought today and sold tomorrow at the higher price to make profit.

The capital requirements can be eased to whatever you are comfortable with but the risk management process will remain the same.

Positional trading ->

When we talk about “Positional trading” then we generally look at what to “Buy or Sell” with the perspective of next few days.

The capital requirements can be eased to whatever you are comfortable with but the risk management process will remain the same.

This style of trading depends on “Buying” or “Selling” a security for 2 days to upto 2 weeks.

The time-frame used in this strategy is “1 Hour”.

Swing trading ->

When we talk about “Swing trading” then we generally look at what to “Buy or Sell” with the perspective of next few weeks.

The capital requirements can be eased to whatever you are comfortable with but the risk management process will remain the same.

This style of trading depends on “Buying” or “Selling” a security for 2 weeks to upto 1 year.

The time-frame used in this strategy is “Daily”.

As far as looking at the charts go for Trading purpose, i would suggest “Price-Action Trading”.

Keep a vigil eye on "Support" and "Resistance" areas.

Below are a few simple “Rules Of Trading” :

• Always manage the Risk before entering a Trade.
• Plan your exit before you enter a Trade.
• Never leverage.
• Never average a losing Trade.
• Trail the Stop-loss.
• Don’t book profits early.
• Stay in conjunction with the Trend.

 

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Regards !!