99% of the newbie traders fail terribly in stock market.
Over the last 310 days I explored how one can systematically work on becoming a successful trader.
Here are the 10 proven ways that will make make you profitable in your trading journeyπ§΅:
Over the last 310 days I explored how one can systematically work on becoming a successful trader.
Here are the 10 proven ways that will make make you profitable in your trading journeyπ§΅:
1. Treat trading like a business:
A sound business will make money and hobbies will take money out of your pocket.
β’ Be thorough about your business
β’ Set realistic expectations
β’ Uncertainty is the part of the game
β’ Strategize to maximize your business's potential
A sound business will make money and hobbies will take money out of your pocket.
β’ Be thorough about your business
β’ Set realistic expectations
β’ Uncertainty is the part of the game
β’ Strategize to maximize your business's potential
2. Know yourself & your trading type:
β’ Intra-day trader: Entries & exits within the same day
β’ Swing trader: Involves holding positions over a period of days or weeks
β’ Positional trader: Trade lasting for several days or weeks even months
β’ Scalper: Quick entries and exits
β’ Intra-day trader: Entries & exits within the same day
β’ Swing trader: Involves holding positions over a period of days or weeks
β’ Positional trader: Trade lasting for several days or weeks even months
β’ Scalper: Quick entries and exits
3. Define your system / set-up:
β’ Could be as simple as trading only rectangles, or bullish and bearish engulfing or only triangles, or VCP or some indicator based set up
β’ There is so much of material over the internet regarding any of the set ups, use that to refine it
β’ Could be as simple as trading only rectangles, or bullish and bearish engulfing or only triangles, or VCP or some indicator based set up
β’ There is so much of material over the internet regarding any of the set ups, use that to refine it
4.Backtest you set-up/system:
β’ Backtest the set up in indices and/or in top 10 Nifty stocks for the past 6 months
β’ Backtest it in a timeframe(TF) in which you are anticipating to take trades in future eg: 15mins, hourly, daily etc
β’ Set up must have atleast 70% probability
β’ Backtest the set up in indices and/or in top 10 Nifty stocks for the past 6 months
β’ Backtest it in a timeframe(TF) in which you are anticipating to take trades in future eg: 15mins, hourly, daily etc
β’ Set up must have atleast 70% probability
4. Stick to a single set-up:
"I fear not the man who has practiced 10,000 kicks once, but I fear the man who has practiced one kick 10,000 times."- Bruce Lee.
β’ Helps in understanding the nuances of that set up
β’ Only way to get good at something is to do it over & over again
"I fear not the man who has practiced 10,000 kicks once, but I fear the man who has practiced one kick 10,000 times."- Bruce Lee.
β’ Helps in understanding the nuances of that set up
β’ Only way to get good at something is to do it over & over again
6. Plan your trades:
β’ Create a watchlist of stocks that you might take trade the next day (max 5 scrips)
β’ Define the entries, exits, stop losses and targets (R/R)
β’ Minimum 1:3 R/R trades
β’ Avoid random in and outs in any scrip
β’ Stick to the trading plan
β’ Create a watchlist of stocks that you might take trade the next day (max 5 scrips)
β’ Define the entries, exits, stop losses and targets (R/R)
β’ Minimum 1:3 R/R trades
β’ Avoid random in and outs in any scrip
β’ Stick to the trading plan
7.Risk Only What You Can Afford to Lose:
β’ Make sure that the money in the trading account is truly expendable. If it's not, then keep saving until it is
β’ Losing money is traumatic enough, so avoid borrowing or putting the money which is set aside for something more important
β’ Make sure that the money in the trading account is truly expendable. If it's not, then keep saving until it is
β’ Losing money is traumatic enough, so avoid borrowing or putting the money which is set aside for something more important
8. Risk Management:
β’ Take risk of only 1% a day and divide that risk in 4 trades per day
β’ Lets say your 1% works out to 4k then divide 4k risk in 4 different trades i.e. risk of 1k per trade
β’ Stick to your SL's as planned in point no. 6.
β’ Take risk of only 1% a day and divide that risk in 4 trades per day
β’ Lets say your 1% works out to 4k then divide 4k risk in 4 different trades i.e. risk of 1k per trade
β’ Stick to your SL's as planned in point no. 6.
9. Position Sizing:
β’ Now that you are ready to risk 4k per trade, lets find the quantity to take trades
β’ Difference between entry and SL is Rs. 10
β’ Qty to trade = 4000/10 = 400 units
β’ Now that you are ready to risk 4k per trade, lets find the quantity to take trades
β’ Difference between entry and SL is Rs. 10
β’ Qty to trade = 4000/10 = 400 units
10.Know When to Stop Trading:
β’ All the 4 trades are profitable
β’ All the 4 trades hit your SL's
β’ Losing all the trades for two consecutive days
i) Markets may have changed, or volatility may have spiked
ii) Take a break of 3 days & start afresh with 0.5% risk per day
β’ All the 4 trades are profitable
β’ All the 4 trades hit your SL's
β’ Losing all the trades for two consecutive days
i) Markets may have changed, or volatility may have spiked
ii) Take a break of 3 days & start afresh with 0.5% risk per day
Follow the above mentioned 10 steps for the next 50 trades and come back and share your results with us.
"Everything valuable takes time, there are no overnight success." - Jack Canfield.
"Everything valuable takes time, there are no overnight success." - Jack Canfield.
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