Making money in the stock market is not eassy. it not only requires patience and discipline but also a great deal of research,commitment and a sound understanding of the market among others.Though no cent percent formula for success in stock markets has yet been discovered,one can follow some set of rules to succeed in trading.
1.Invest only with your surplus funds: If you want to take risk in a volatile market like this, then see whether you have surplus funds which you can afford to lose. iit is not necessary that you will lose money in the present scenario. Your investments can give you huge gains too in the months to come. But no one can be hundred percent sure. That is why you will have to take risk with funds which you can afford to lose
2.Follow a disciplined Strategy: Follow your strategy, follow your trading rules, especially risk management and money management rules. The most successful traders, have trading strategy and strict trading rules, and they abide by them all the time. The investors who have put in money over a strategy, and followed the system patiently have been seen generating outstanding returns. We at return wealth provide algorithmic trading services to clients such as working professionals, HNI’s, retail investors who donot have much time to spend before the live markets. The risk reward ratio of our algorithm is 1:4 with an average returns of 70% on yearly basis.
3.Avoid the mentality of getting influenced by others action: If everybody around is investing in a particular stock, the tendency for other investors is to do the same. But this strategy is bound to backfire in the long run. Follow your own method of disciplined trading.
4.Donot let your emotions play in market: Many investors have been losing money in stock markets due to their inability to control emotions, particularly fear and greed. People tend to make emotional decisions when things don’t go as planned. It’s natural to want to act on excitement or discomfort as quickly as possible. Making haste decisions might seem like the right thing to do, but if you forego rational decision-making in the process, the results could wind up far less than optimal.
5.Have realistic expectations from your system: Nothing wrong with hoping for the ‘best’ from your investments, but you could be heading for trouble if your financial goals are based on unrealistic assumptions. If you think that you can double your account every few months in trading, you are not likely to set realistic profit targets. You will likely over trade your way to a smaller account balance. You will risk too much, and you will lose too much. Greed causes traders to be overconfident and over active in the market, which leads to mistakes. Small consistent and compounded profits will lead to a fortune in the long run.
6.Keep Updated about happenings around the world: Any important event happening in any part of the world has an impact on our financial markets. Hence we need to constantly monitor our portfolio and keep affecting the desired changes in it.
7.Risk Reward Ratio
Most of the people concentrate only on the profit generated on every trade, but it is important to understand the concept of risk involved. Risk is the amount of money which you are going to lose if the trade goes wrong. So a good trade should have risk reward ratio of at least 1:2
For eg.You enter nifty buy at 8600 with stop loss of 8580(risk taken 20 points).Then your profit target should be at least 8640(reward of atleast 40 points)
We at return wealth provide algorithmic trading services to clients such as working professionals, HNI’s, retail investors who don’t have much time to spend before the live markets. The risk reward ratio of our algorithm is 1:4 with an average returns of 70% on yearly basis.