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Ten important things to keep in mind while trading

by Clare Louise
February 7, 2020
in Business
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Ten important things to keep in mind while trading
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When you started playing cricket, did you knew how to play it? When you started to drive a car, did you knew how to drive it? No right? Well, this is also the case of Trading. You need to know a few things before getting into this game because it is very hard for a newbie but fun for the addicted players of it.

Trading is just a simple act of buying and selling of financial instruments like stocks, bonds, securities. A brokerage firm like EFT is responsible for doing this act,which not only guides you where to invest but also how to invest and what can be the future outcome because they have a dedicated research department just for predicting the performance of every financial instrument.

So, you are interested in getting into trading? It is an amazing game. If you play it carefully but intelligently, it can make you financially independent otherwise it can put you in debt. Hence keep the following things in mind when you are going for trading:

Things to keep in mind while trading:

When we talk about trading business, we mostly see that there are many huge business owners are involved in this game. The people who have a lot of money. They are not only the players who buy and sell the stocks and securities but also the one who issues them for their companies. So you are upfront of some big minds. Keep these things in your mind:

1)      Make your rules: You cannot play any game properly if you do not have rules for it. List your own rules on how you are going to play the game. Like at what level you will sell your security/stock or at what level you will buy or even how much money you will invest and for how much time you will hold the stock/security. These rules will help you have a clear path and also will help you evaluate your performance, and yes, you can alter the rules when necessary.

2)      Never trade based on hope: The biggest reason why most people fail in the game of trading is that they do not look for evidence or trends rather play on institutions or hope. Trading is not a game of hope, but a game where some powerful players example controls things if someone spreads a fake news like XYZ stock price will go up hence buy the stock, and the source is very powerful, the price of XYZ stock will shoot up, or if a news comes out that a company is working on some revolutionary technology the prices of its shares can go up, so you have to evaluate every news and use either your knowledge or consult some expert but never play on hope.

3)      Analyze your every mistake: In every game, no one is perfect. Everyone can make a mistake, but the ones who analyze them and correct his moves win the game; This is also what you constantly need to do. Your money is on stake so you cannot be relaxed and keep on repeating the same mistake. Do you have to look at why you lose your money? What were the external conditions when it happened? What was the news? And so on but try not to repeat the mistake.

4)      Do not Jump the gun: Do not play randomly and fire all your money. Create a complete checklist before investing or making a decision of selling or buying. Have all or most important indicators on the list. Do not just follow the news. Evaluate it as well.

5)      Do not act on every market call: Market is not right every time. Sometimes it spreads fake news which results in temporary gains or losses. You have to have the eye and mind to see and evaluate the condition and act accordingly. Reacting on every news will not help you but rather can pull you on the ground.

6)      Start with low-risk options: Never go for a risky trade from the start. It is just like facing a 100mph bowler on the first day of training. You have first to experience the market. Look at the trends. Look at how bigger and successful players are playing in the market. How they are acting to a certain condition or news in the market. How they are predicting the changes. As you are a newbie, you cannot understand the dynamics of trading on the very first day. Hence in the start, play it safe.

7)      You must look for selling higher not buying at lower: When you are starting up do not look for low priced shares and selling them on higher price because they might be the shares that always stay low. However, your aim must be, especially if the market is stable, selling the stock/security at a higher price not buy a stock at a lower price. The main reason is that this activity will help you understand the market buying and selling because as a newbie, you cannot control or influence the market price.

8)      Do not hold stocks for so long: One of the mistakes a newbie makes is holding on stocks. Stocks are not saving options, but investment and trading options. So do not hold the stock for long. Keep hedging the stock and earn small gains continuously so that you keep on earning rather waiting for a boom in the economy.

9)      But if you can afford: Just because there is news of boom does not mean that you should buy them although the news is real. You have to look at your pocket. Do not buy a stock which you cannot afford because you can be capital short for a new and greater opportunity and also this means putting all your eggs in one basket. If that stock goes down, you will lose all of your money. So do not buy that stock.

10)   Keep revising the market: What is trending today is not likely to be trending tomorrow. It is just like videos on YouTube. A video that goes on trending in the morning might not be trending after few hours so keep an eye on the market constantly. Just keep revising the condition and your strategies.

The bottom line to start:

Trading is a very addictive game. It can help you gain financial freedom or can get you in trouble, but it all depends upon how you play it. You have to keep an eye on the market that how it is responding on different news, who are the speculators of the game, who are the big players who control or influence the market, you play it safe in the start and keep revising the market and your strategies.

Putting all your eggs in one basket is the worst way of playing this game. So keep this in your mind that you have to play it in a way that does not destroy your capital.

Clare Louise
Clare Louise
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