IN INVESTMENT & TRADING |
Don’ts
1. Don't panic
The market is volatile. Accept that.
It will keep fluctuating. Don't panic. If the prices of your shares have fall,
there is no reason to want to sell them in a hurry. Stay invested if nothing
fundamental about your company has changed.
2. Don't make huge investments
When the market dips, go ahead and
buy some stocks. But don't invest huge amounts. Pick up the shares in stages.
Keep some money aside and zero in on a few companies you believe in. Most
importantly keep buying the shares periodically.
3. Don't chase performance
A stock does not become a good buy
simply because its price has been rising phenomenally. Once investors start
selling, the price will drop drastically.
4. Don't ignore expenses
When you buy and sell shares, you
will have to pay a brokerage fee and a Securities Transaction Tax. This could
nip into your profits especially if you are selling for small gains (where the
price of stock has risen by a few rupees).
Do’s
1. Get rid of the junk
If shares you have bought before are
showing a profit, you could consider selling them. Even if they are not going
to give you a substantial profit, it is time to dump them and utilize the money
in other if you no longer believe in them.
2. Diversify
Make sure you are invested in stocks
of various sectors. Do not invest all your fund in same sector.
3. Believe in your investment
Don't invest in shares based on a
tip, no matter who gives it to you. Analyze the fundamental of company, future
potential of products and services and then make decision whether to invest or
not.
4. Stick to your strategy
Stick to your stock allocation. Do
not over exceed or limit your shares portfolio.
It seemingly looks to be the
simplest and the most rewarding. But in intraday trading one has to be very
fast and quick and have to be on your toes always, so there are certain rules
which one has to keep in mind.
If index is in positive from
yesterday and stock u are holding is in minus then it should be cut and if
intraday trend of index is in buy then one should buy share in which is in
plus.
It isn't necessary that share which
is weak today during intraday trading might be weak tomorrow also,
simultaneously if share is strong today might not be strong tomorrow
If US Markets have gone up
overnight, markets here in all probability will open strong, so one should be
quite careful when buying shares as general psychology of public is to buy when
good news is there.
Being contrarians is very Imp. while
trading intraday.
Stop loss is must while trading
intraday.
Always trade in very liquid shares
i.e. which have very high volume because as entry and exit can be very fast in
such shares.
Do paper trading before u actually
start trading so that when u start making paper profits, then shift to actual
trading.
Keep your volume constant e.g.: if u
trade in five lots of nifty future then trade in five lots only. This position
can be increased only when u are satisfied with your trading for month. It
shouldn't be that one day u buy five lots and next day u trade in ten lots
& third day u get loss and stop trading for two days.
Fear and Greed are at maximum levels
while trading intraday so always have less position when u are new to intraday
trading as otherwise u will be mostly under tension.
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