Suggestions for Stock Market Trading
1. Do not over trade - If your trading capacity is Rs. 2,00,000 then avoid using margin. Infact trade with 1.5 Lakhs only.
2. Diversify- One should diversify his portfolio, invest in different sectors.
3. Buy when vibes are not good that is when stocks are on decline in other words buy at bad news. Sell when prices are high that is when there is good news.
4. Have realistic targets - Don't thinks of making crores in one single day. Market will open daily have realistic targets in your mind and trade with patience.
5. Stoploss - Always follow stoploss. Don’t be afraid of loosing sometime that is also learning experience.
6. Strategy - Don't cut positions in loss before stoploss and don’t exit in minor profit before target. Always wait for target.
7. Don’t always think of buying at low price and sell at higher price. Do not be afraid to buy at high price and sell at lower price.
8. Sell when everyone is buying and Buy when every one is selling.
9. Don’t be a buyer or seller always, Work as per market trend. Always follow market trend.
10. Take Long positions only in companies having strong fundamentally. For short term position find some good stock from speculation point of view.
General Market Advice:
1. Never chase a stock.
2. Buy when markets are in the grip of panic.
3. Only buy fundamentally strong stocks, which are undervalued.
4. Buy stocks grown in top line and bottom line over the past years.
5. Invest in companies with proven management.
6. Avoid loss-making companies.
7. PE Ratio and Growth in earnings per share are the key.
8. Look for the dividend paying record.
9. Invest in stocks for sure returns.
10. Stocks have been the high yielding asset class over the past.
11. Stocks are an asset class.
12. The basic property of any asset class is to grow.
13. Buy when everyone is selling and sell when everyone buys.
14. Invest a fixed amount each month.
Important points for option traders
As option trader remember certain golden rules for option trading
1. Dont hold and sit tight with your option. Trade every day. Say, you have bought a put option at 100, lets say it has come to 90, you dont have to wait for it to go above 100 to book profit, you sell your option on markets intraday fall and then you buy back the option on market rise and pocket the difference of at least 10 to 15. As far as possible avoid carrying over of options unless you are sure of the markets next day. If you bought a call or a put at start of the month at 150, you will find its value at 75 or less by middle of the month so if you have not traded daily , half of the value is lost by mid month.
2.whether market goes up or down or flat, option value will reduce by atleast 5 points every day, so trading daily at least gives you back the daily 5 point automatic loss due to time decay. So writing options (selling fresh a call instead of buying a put after market rise or selling fresh a put instead of buying a call after market falls ) have a much better chance of gain than buying options.
3. If your option value goes down by 25% , boldly quit the option. This will protect you from seeing zero value for your option. The habit of holding on to the option thinking that it may gain after some days may give you only 1 success out of 10 attempts so be bold to quit early. (this is the most important point in option trading, people generally book big loss in options when this golden point is neglected.)
4. Do not exhaust all your money in buying options. Only trade in 60% of money and always have 40% reserve for opportunistic trades.
5. Though averaging of options looks very attractive, it is like slow poison. Avoid averaging as far as possible. Adjust your mind to do reverse trade, meaning in case of holding 5000 put, sell a lower option say 4800 put in case of fall in markets & rise in put value, or in case holding 5000 call, then on market rise when call value rises sell higher call of 5200 or if holding a put, boldly buy a call against the objection of your mind.
6. The above option rules are time tested and mostly found to be correct. Although most of the time your analyst will guide you when to buy or sell but you on your own also be rigid on the above 5 golden rules for options. You may fail once but 9 out of 10 times you will not regret.
7. The most important thing to be kept in mind is that you must have your own mental must quit levels say about 5 or 10 points to avoid bigger loss in case the communication from advisers side fail due to unforeseen circumstances.
8. In case you are holding an option without stop loss or hedging & it goes badly against you, then do not panic, around the end of the 3rd week of the month quit the option and buy the same option of next month and after the market having gone in one direction, it will retrace some amount to help you to gain in the next months option as the current month option would become zero if held against the current trend.
9. The most important point to remember in option trading is, in case you have bought a call and it has gone against you, then while averaging by buying another call at a lower price, never hesitate to buy a put also . Meaning every time you average your original option, at each time buy an opposite option also. So every time you average the original call, at each time buy a put also along with the call . This put invariably will be your protector as the averaged call will invariably become zero. Remember this golden rule.
1. Do not over trade - If your trading capacity is Rs. 2,00,000 then avoid using margin. Infact trade with 1.5 Lakhs only.
2. Diversify- One should diversify his portfolio, invest in different sectors.
3. Buy when vibes are not good that is when stocks are on decline in other words buy at bad news. Sell when prices are high that is when there is good news.
4. Have realistic targets - Don't thinks of making crores in one single day. Market will open daily have realistic targets in your mind and trade with patience.
5. Stoploss - Always follow stoploss. Don’t be afraid of loosing sometime that is also learning experience.
6. Strategy - Don't cut positions in loss before stoploss and don’t exit in minor profit before target. Always wait for target.
7. Don’t always think of buying at low price and sell at higher price. Do not be afraid to buy at high price and sell at lower price.
8. Sell when everyone is buying and Buy when every one is selling.
9. Don’t be a buyer or seller always, Work as per market trend. Always follow market trend.
10. Take Long positions only in companies having strong fundamentally. For short term position find some good stock from speculation point of view.
General Market Advice:
1. Never chase a stock.
2. Buy when markets are in the grip of panic.
3. Only buy fundamentally strong stocks, which are undervalued.
4. Buy stocks grown in top line and bottom line over the past years.
5. Invest in companies with proven management.
6. Avoid loss-making companies.
7. PE Ratio and Growth in earnings per share are the key.
8. Look for the dividend paying record.
9. Invest in stocks for sure returns.
10. Stocks have been the high yielding asset class over the past.
11. Stocks are an asset class.
12. The basic property of any asset class is to grow.
13. Buy when everyone is selling and sell when everyone buys.
14. Invest a fixed amount each month.
Important points for option traders
As option trader remember certain golden rules for option trading
1. Dont hold and sit tight with your option. Trade every day. Say, you have bought a put option at 100, lets say it has come to 90, you dont have to wait for it to go above 100 to book profit, you sell your option on markets intraday fall and then you buy back the option on market rise and pocket the difference of at least 10 to 15. As far as possible avoid carrying over of options unless you are sure of the markets next day. If you bought a call or a put at start of the month at 150, you will find its value at 75 or less by middle of the month so if you have not traded daily , half of the value is lost by mid month.
2.whether market goes up or down or flat, option value will reduce by atleast 5 points every day, so trading daily at least gives you back the daily 5 point automatic loss due to time decay. So writing options (selling fresh a call instead of buying a put after market rise or selling fresh a put instead of buying a call after market falls ) have a much better chance of gain than buying options.
3. If your option value goes down by 25% , boldly quit the option. This will protect you from seeing zero value for your option. The habit of holding on to the option thinking that it may gain after some days may give you only 1 success out of 10 attempts so be bold to quit early. (this is the most important point in option trading, people generally book big loss in options when this golden point is neglected.)
4. Do not exhaust all your money in buying options. Only trade in 60% of money and always have 40% reserve for opportunistic trades.
5. Though averaging of options looks very attractive, it is like slow poison. Avoid averaging as far as possible. Adjust your mind to do reverse trade, meaning in case of holding 5000 put, sell a lower option say 4800 put in case of fall in markets & rise in put value, or in case holding 5000 call, then on market rise when call value rises sell higher call of 5200 or if holding a put, boldly buy a call against the objection of your mind.
6. The above option rules are time tested and mostly found to be correct. Although most of the time your analyst will guide you when to buy or sell but you on your own also be rigid on the above 5 golden rules for options. You may fail once but 9 out of 10 times you will not regret.
7. The most important thing to be kept in mind is that you must have your own mental must quit levels say about 5 or 10 points to avoid bigger loss in case the communication from advisers side fail due to unforeseen circumstances.
8. In case you are holding an option without stop loss or hedging & it goes badly against you, then do not panic, around the end of the 3rd week of the month quit the option and buy the same option of next month and after the market having gone in one direction, it will retrace some amount to help you to gain in the next months option as the current month option would become zero if held against the current trend.
9. The most important point to remember in option trading is, in case you have bought a call and it has gone against you, then while averaging by buying another call at a lower price, never hesitate to buy a put also . Meaning every time you average your original option, at each time buy an opposite option also. So every time you average the original call, at each time buy a put also along with the call . This put invariably will be your protector as the averaged call will invariably become zero. Remember this golden rule.
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