Simple Procedure for trading:

1) See the trade carefully. See whether the you can afford the stop loss or not. See if the risk/reward ratio is good or bad.

2) If the trade is about buying at supports, buy at supports. If the trade is about buying above resistance, then buy above resistance, once its crossed. Once it has crossed, don’t jump in immediately, just wait for 1 2 mins and buy at cheapest possible rate.

3) Once in considerable profits, see that what is the trailing stop. If there is no trailing stop, then put mathematically, say 50% of the gains which you are getting.

4) Once your target hits, exit. Buy again either on next support (ask advisor), or hold on with a trailing stop of nearest support (ask advisor), Or buy above target1.

5) If your stop loss hits, EXIT. Don’t start asking your mind that it will bounce back if I hold or not. Even if you plan to be in the stock, atleast exit intraday and buy at next supports. This should ideally reduce your buying level.

6) Never try to speculate about stocks. If there is a fundamental reason, then understand that fundamentals take time to show the effect.

7) Always remain hedged while trading on leveraged positions.

8) If you don’t require the profits, do invest the generated capital in some fundamentally good stock and forget. You may choose to buy the stocks of the company which you were trading. Since you didn’t physically pay for these stocks, you cant loose anything on them. Believe me, if somebody had bought Unitech of 1 lakh 4 yrs back, it would have been 20 crores now!

So, just follow these practices in real life. It will take some time to be used to of it, but once you get used to, you will notice a sudden improvement in your skills, profits, and reduction in your holdings. If you hold your loss making trades after stop loss, you will ultimately reduce your aggression in new trades, and you will reduce your capacity to get into new trades. But always make sure that the stop loss should be small.

Even if you are emotionally concerned about the stock, you should exit your capital and buy some shares in cash or buy an option. If your stock is fundamentally right, it will rally in some time. As and when it rallies, the cash stock or option you are holding, will definitely bring your stop loss money back!

Suppose lot size is 100, you lost 10 rs in stoploss, means 1000 rs lost. Now if you take 10 stocks in cash, and leave them for 1 month, and if the stock rallies 100 rs, your money is back!

There are countless opportunities, you just need to stop your heart from interfering in financial matters. The moment it stops, you will find that its so simple!

Believe me, its all about managing and reducing your risks and taking steady profits.

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