The following points/analysis has been mentioned based on our experience.
A trading plan for day trading (intraday) and for delivery based trading (investing) is must to become successful in the share market.
But it has been observed that most of the new comers don’t create a trading plan rather they enter into share market to become rich in single day or in very short duration.
The following are few points to be included while creating the trading plan, the experienced traders can include more points but following 5 points are basic and very essential points to get success in trading shares, futures and options, Forex trading, commodity trading etc
1. Your trading objective (reason for trading)
2. What and when to trader?
3. Taking care of your money
4. Maintain your trading history
Your trading objective (reason for trading)First, we have to define our trading objectives. Why are you trading? What is your end goal? But mostly new comers to shares market and traders are completely out of goals.
For example, a new trader might want their Rs 20,000 investment turn into Rs 100,000 in their first year or a day trader (intraday trader) want Rs 10,000 turn into Rs 20,000 in a day. This may happen but chances of failure are at large. Share market is not gambling but rather it is systematic method to earn money.
Such unrealistic expectations end up with huge losses before they ever had a chance to gain some profits.
According to our analysis, if a new comer makes 20-40% on their initial investment in their first year then that is outstanding returns. The next year would be definitely better than first year.
Day traders should be able to target around 5% to 8% returns per month (this becomes 60% to 96% per year), but it is not as easy as new comers think and jump into share market. Day trading is highly risky if done with appropriate knowledge and experience.
Delivery based trading is less risky and hence would provide low profits compared to day trading.
Important Note -
Any type of trader has to make up the mind that how much profits have to be made or targeted. But rather we suggest keeping small targets and start and once you gain experience and automatically the profits will increase.
Please visit our “Day Trading” section for more information
2) What and when to trader?It is important to decide or at least to know that what I am going to be like a day trader or delivery based trader or be an investor (investor buys stocks of the company having strong fundamentals and holds for longer duration)
Reasons
Day trading requires you to be present in front of computer screen or trading terminal throughout the market hours and very important to be constantly in touch with the latest market happenings.
While delivery based trading is not required that much alertness compared to day trading buy keeping in touch with markets is always beneficial.
Investor is totally different from above two. He doesn’t have to be very active in markets and in front of computer or trading terminal.
So based on your time and other responsibilities the decision has to be made, so that your decision should not come in between with your other schedule and responsibilities.
Instead of trading on all stocks, trader can prepare daily list of stocks in news, volume gainers, losers etc and do trading for that day or wait for opportunity and then trade.
We have also made lots of provision of stock picks for day traders so traders can make use of same.
Day trading requires lots of market experience and market knowledge while investing does not require so much.
We advice for new comers to start day trading only after doing lots of market knowledge and only after doing paper trading practice.
Please visit our various stock picking sections to get readily available stocks.
3) Taking care of your moneyFirst and very important is don’t take any loan for trading as this will pressurize to trade and make daily profits which is not possible in share market. In share market it is not possible to make daily profits and that also by taking any sort of pressure.
Taking care of Money is probably the most important aspect of trading. First, you need to determine how much capital you have to risk in share market. Then you must determine how much you will risk on each trade.
Most traders risk 1-3% of their trading account balance on each trade. This may sound low to the inexperienced trader, but it is recommended and highly advised to risky only appropriate amount in trading.
Generally we advice to do paper trading practice before actually risking your money and once you gain enough experience and confident and can gain money in paper trading then you can start trading very small amount and once you get success you can start increasing the trading amount.
4. Maintain your Trading HistoryThe final step is to keep track of your daily trading or investment portfolio. The following points should be included and if required trade and/or investor can include more points• Date • Name of stock • Action (buy or sell) • Quantities (how many quantities were bought/sold) • Amount invested • Expected Profit potential (approx - so that you can square off your trade when the price reaches this level)• Final Result -Either profit or loss • Account balance after the trade has closed• Mention Notes - Note down your experience and how you did this trade.
Above format makes tracking results very simple.
This is a pretty basic start to having a trading plan. Experienced traders know that many more details to prevent mistakes and encourage good habits.
A trading plan for day trading (intraday) and for delivery based trading (investing) is must to become successful in the share market.
But it has been observed that most of the new comers don’t create a trading plan rather they enter into share market to become rich in single day or in very short duration.
The following are few points to be included while creating the trading plan, the experienced traders can include more points but following 5 points are basic and very essential points to get success in trading shares, futures and options, Forex trading, commodity trading etc
1. Your trading objective (reason for trading)
2. What and when to trader?
3. Taking care of your money
4. Maintain your trading history
Your trading objective (reason for trading)First, we have to define our trading objectives. Why are you trading? What is your end goal? But mostly new comers to shares market and traders are completely out of goals.
For example, a new trader might want their Rs 20,000 investment turn into Rs 100,000 in their first year or a day trader (intraday trader) want Rs 10,000 turn into Rs 20,000 in a day. This may happen but chances of failure are at large. Share market is not gambling but rather it is systematic method to earn money.
Such unrealistic expectations end up with huge losses before they ever had a chance to gain some profits.
According to our analysis, if a new comer makes 20-40% on their initial investment in their first year then that is outstanding returns. The next year would be definitely better than first year.
Day traders should be able to target around 5% to 8% returns per month (this becomes 60% to 96% per year), but it is not as easy as new comers think and jump into share market. Day trading is highly risky if done with appropriate knowledge and experience.
Delivery based trading is less risky and hence would provide low profits compared to day trading.
Important Note -
Any type of trader has to make up the mind that how much profits have to be made or targeted. But rather we suggest keeping small targets and start and once you gain experience and automatically the profits will increase.
Please visit our “Day Trading” section for more information
2) What and when to trader?It is important to decide or at least to know that what I am going to be like a day trader or delivery based trader or be an investor (investor buys stocks of the company having strong fundamentals and holds for longer duration)
Reasons
Day trading requires you to be present in front of computer screen or trading terminal throughout the market hours and very important to be constantly in touch with the latest market happenings.
While delivery based trading is not required that much alertness compared to day trading buy keeping in touch with markets is always beneficial.
Investor is totally different from above two. He doesn’t have to be very active in markets and in front of computer or trading terminal.
So based on your time and other responsibilities the decision has to be made, so that your decision should not come in between with your other schedule and responsibilities.
Instead of trading on all stocks, trader can prepare daily list of stocks in news, volume gainers, losers etc and do trading for that day or wait for opportunity and then trade.
We have also made lots of provision of stock picks for day traders so traders can make use of same.
Day trading requires lots of market experience and market knowledge while investing does not require so much.
We advice for new comers to start day trading only after doing lots of market knowledge and only after doing paper trading practice.
Please visit our various stock picking sections to get readily available stocks.
3) Taking care of your moneyFirst and very important is don’t take any loan for trading as this will pressurize to trade and make daily profits which is not possible in share market. In share market it is not possible to make daily profits and that also by taking any sort of pressure.
Taking care of Money is probably the most important aspect of trading. First, you need to determine how much capital you have to risk in share market. Then you must determine how much you will risk on each trade.
Most traders risk 1-3% of their trading account balance on each trade. This may sound low to the inexperienced trader, but it is recommended and highly advised to risky only appropriate amount in trading.
Generally we advice to do paper trading practice before actually risking your money and once you gain enough experience and confident and can gain money in paper trading then you can start trading very small amount and once you get success you can start increasing the trading amount.
4. Maintain your Trading HistoryThe final step is to keep track of your daily trading or investment portfolio. The following points should be included and if required trade and/or investor can include more points• Date • Name of stock • Action (buy or sell) • Quantities (how many quantities were bought/sold) • Amount invested • Expected Profit potential (approx - so that you can square off your trade when the price reaches this level)• Final Result -Either profit or loss • Account balance after the trade has closed• Mention Notes - Note down your experience and how you did this trade.
Above format makes tracking results very simple.
This is a pretty basic start to having a trading plan. Experienced traders know that many more details to prevent mistakes and encourage good habits.
