1) Who can do successful trading?
What is trading?
The general meaning of trading is nothing but buying and selling of items and share trading means buying and selling of shares in the share market is called as share trading.
Who is the trader?
A person who does buying and selling of shares frequently is called as share trader.
a) Traders do buying and selling of shares without worrying about company’s performance.
Traders don’t worry how the company is doing and how big or small the company is, traders just do buying and selling of shares based on the opportunity to make money.
Traders are not interested to know the company’s performance or profits.
b) Trader’s are basically opportunity finder and opportunities can be in any form like good news or bad news or any government declaration or any company’s announcement. Any opportunity that makes the movement in the share price interest’s traders and accordingly they take respective positions either to buy or short sell and make money.
c) Trading requires lots of market knowledge and experience so traders keep themselves updated all the time and hence the trading has considered as full time business/job and not part time. After gaining enormous experience, traders can do it part time as well.
d) Trader do very frequent buying and selling of shares on daily basis, weekly basis and on monthly basis. Traders can be day trading and also short term trader.
Risks Involved -
Trading involves very high risk and it can wipe out all money/capital. So it is not suitable for everyone. If you are not willing to take any kind of risk then it is strongly advisable to avoid trading in any financial instrument like stocks, options, futures, commodities, currency (forex) etc.
Basically trading is not recommended for people who are not willing to take risk and also new comers to share market.
First learn and do paper trading practice (which is explained in next section) and if you get success in paper trading then go for real trading.
Trading involves very high risk and hence provides high returns in small span of time.
Please note - We have posted various trading strategies, methods, techniques including stock picking patterns for all types of traders on our website, so make use of them as all are free of cost.
Who can do successful trading?
Based on 4 parameters it is concluded that trading is not possible for everyone
1. Time Frame
If a person don’t have 6 to 7 hours to spend in markets then trading looks difficult, especially for new comers. If you are experienced then it is possible to manage with lesser time.
2. Risk taking ability
A person should be able to take high risk in trading. Sometimes it is quite possible to lose all money. If you are looking to earn money in trading without taking risk then trading is not recommended.
Patience is very key factor in trading. If you have taken the trade with all information then you have to wait till target achieved.
4. Learn and Learn
You need to spend some time before opening the market to get all information related to companies in news. It is easier to trade on companies in news and make profit.
5. Paper trading practice -
If you want to start trading then you must first start doing paper trading practice and make profit. Once you get success then you can start with real trading with very less amount and gradually move ahead.
So the conclusion is trading successfully is not possible for everyone. If a person is able to follow above 5 factors then there are high chances of success.
Precaution for trading -
Trading requires lots of market knowledge and experience so we do not recommend trading for new comers to share market.
We daily receive lots of email from new comers saying they have made huge losses in trading. So we always recommend first learn and then do paper trading practice before actual starting trading with money.
To learn more paper trading practice please visit this page
2) How to start trading?
This information will help both new comers and experienced traders in share
If a person spends some months in market then it may not be necessary that he
will be well acquainted with markets and share prices and will be able to do
At the same time new comers need to learn certain market strategies and
techniques so that after spending some time he or she will be able to do
3) How to make trading plan to get success in share market?
Without trading plan it is just gamble in share market. If you have trading plan before market starts, then there are high chances of making profit for that day.
To make profits in day trading you should look for low profits per share and not wait for big profit per share because in day trading lots of external factors affect the indices and share price so the price can easily fluctuate to any direction at any time.
So if you are planning to trade and you don’t have trading plan then you are risking your capital.
Let’s see how to prepare a successful trading plan :-
Make a simple trading plan and make profits on daily basis
Include following 4 strategies in your trading plan before the start of the market:-
a) List of 4 to 6 shares to trade today.
b) Profit taking strategy.
c) When to exit the trade - mention stop loss as well as profit strategy.
d) Not to trade if market or share prices are moving in very small range.
a) Make a list of 4 to 6 shares to trade today
Mostly include those which are in news. OR include those which were highest gainers and losers on yesterday’s closing.
Please visit the page of stock selection for daytrading
b) Profit taking strategy
If you want to make profit then you must have plan to take profit. How much profit per share should be taken? Because, if you don’t have profit booking strategy then you will end up your day with losses.
So how to book profit and when?
Generally most of the traders fail because they wait for big profits per share in single trade. In day trading one should not wait for big profits per share.
For example -
If you buy 500 shares of Bank of Baroda at Rs 170 then you should take profit of Rs 1 per share.
So your profit will be Rs 500 (for 500 shares).
You have to pay brokerage and taxes
Brokerage rate are very competitive nowadays- you have to pay just Rs 20 to Rs 30 flat per trade.
Taxes - Altogether you have to pay Rs approximately - Rs 50.
So totally you are paying Rs 80 for this trade so your net profit will be RS 420.
It is very easy to take Rs 1 profit in this share but if wait for Rs 4 to 5 per share then you would end up into losses. Because it is very rare for traders to catch Rs 5 movement but it is very much easy to catch Rs 1 movement.
So do paper trading practice and get the profits and then start trading with real money.
Likewise take small profits and do multiple trades in a day.
For more information about taxes and brokerage calculation please visit this page
How to take profit based on share price?
There is no any rule for profit taking but successful trading requires some strategy and techniques.
Below profit taking strategy ensures that traders takes small profit and makes successful trades.
The following list shows how profits are taken in day trading -
So if the stock price is till Rs 100, trader can take 0.5 paise as profit per stock.
• If the stock price is between Rs 100 to 200, trader can take profit of 0.8 paisa to Rs 1.0.
• If the stock price is between Rs 200 to 300, trader can take profit of Rs 1.0 to Rs 1.5
• If the stock price is between Rs 300 to 400, trader can take profit of Rs 1.5 to Rs 2.0
• If the stock price is between Rs 400 to 500, trader can take profit of Rs 2.0 to Rs 2.5
• If the stock price is between Rs 500 to 600, trader can take profit of Rs 2.5 to Rs 3.0
• If the stock price is between Rs 600 to 700, trader can take profit of Rs 3.0 to Rs 3.5
• If the stock price is between Rs 700 to 800, trader can take profit of Rs 3.5 to Rs 4.0
so on it continues….
c) When to exit the trade
When to exit the trade is as important as entering the trade. Exiting the trade will decide your profit and loss of the day.
As stated above if you keep your profit book strategy at lower side then surely you will make your day by profits but in day trading lots of external factors dominate the markets so it is quite possible that sometimes even Rs 1 profit taking may not be possible so during such times you need to book loss.
One thing you have to remember that in day trading it is not possible to take profit every day but at the end of the month you strategy should be profitable.
So losses and profits are part of trading so need to have to accept both and limit losses and make profits more in a month.
It is also seen that if trader make losses then some traders try to make aggressive trade to make profit and they end up into making more losses.
Remember aggressive and overtrading leads to heavy losses in share market.
d) Not to trade if market or share prices are moving in very small range
Due to some reasons some days markets and hence share prices move in very small range so it becomes difficult for traders to notice share price movement and hence unable to book profits. During such days traders need not do forceful trades. The wise traders will stay away from markets during such days. If trader tries to do trading in such days then there are lots of chances for losses.
4) Why to avoid trading blindly on tips ?
Are you in share market to trade on direct tips and expect to be successful? Then we have hundreds of facts to tell you that it may not be wise decision. Maximum people fail in share market due to this plan.
You can’t blindly buy and sell the shares without having knowledge and make profits. If you want to try then do paper trading with tips and see the success rate. Try for one full month and if you get success then you can take the decision.
It is also seen that some traders spend months in markets and getting all knowledge they try tips and sometimes this strategy also becomes successful.
Trader should have market knowledge, study of share price movements, what type of news and which news makes how much affect on share prices, how to wait for quarterly results and trade to get best profits, when not to trade so all this knowledge makes the trader more successful.
Why trader should avoid trading on borrowed money?
Been in share market for last 10 years we have seen that people think of making big money in share market in very short time so even if they don’t have money then borrow through friends or relatives or either through banks and start trading.
Generally it is observed that borrowed money puts pressure on trader to make profits and to return the money either due to interest rates or due to other commitments. Such situation makes trader to do unwanted and forceful trades and ends up into losses.
If you have Rs 1000 then do paper trading practice and if you get success then use Rs 1000 and start trading but avoid trading on borrowed money.
Why new traders should avoid using margin amount?
Margin amount is extra amount provided by broker to everyone for a day for trading. Generally it is 4 to 6 times based on share category. If the share is part of index like Nifty or Sensex then broker provides 4 to 6 times of your available money for trading.
But the condition is if you use the margin amount then broker wants that money before market closes at 3:30 PM whether you are making losses or profits so you have to square off your trades irrespective whether you are into profits or losses before 3:30 PM. Some brokers square off your trades automatically at before 3:30 pm.
So the conclusion is if you have Rs 1000 then trade only with your money. So if you buy shares of Rs 1000 and for some reasons if the share price did not move up then you can take delivery of these shares and sell tomorrow with profits instead of selling into losses on same day. But if you margin amount it is not possible.
But once you become experienced and start getting profits money after money then slowly you can start using margin amount.
We hope you would have understood why not to use margin amount. If you have any questions then please write to us by visiting our get free advice page.
6) When to avoid trading to save your capital?
Successful trader knows when to avoid trading. Avoiding trading at improper times is as good as making profit.
Following are few factors during which trading done may not provide returns but in fact may lead to losses.
1. If you are impatient.
2. If you have no time and want to do fast trading. Successful trading to make profit requires time and patience.
3. If you are not getting any shares for trading. Sometimes it happens that most of the shares trade lackluster and traders get
confused and unable to pick any shares for trading.
4. Above factors are important and unless and until if you get hold of above patterns it is difficult to get success in trading.
5. Avoid overtrading - Overtrading means, trading with all the money you have and also utilize margin amount. So this type of
buying and selling shares in huge quantity may lead to fear and this fear most of the times leads to losses.
6. Don’t do emotion based trading. - Don’t do multiple trades if you encounter losses for one trade. Sometimes if traders
books losses then he does multiple trades to recover that losses and mostly these trades happens based on emotions and
likely such trades leads to losses.
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