Trading For A Living-6 Facts Everyone Should Know

When you first listen about trading for a living, you simply imagine that a very luxurious life with quite less work and making money everyday is what defines trading for a living. This often happens with many people who just have read somewhere or listened to few acquaintances talking about trading for a living scenario. I have come across persons who leave their well paid government jobs for trading for a living lifestyle and are very frustrated of themselves of not knowing truth before and falling for the easy money available on the table myth.On the contrary I have also come across people who never took any jobs as they were already determined for achieving their goal of trading for a living and they are doing it successfully day after day & year after year. There are some very realistic facts which one should keep in mind while deciding to making futures trading , stock trading, forex trading or commodities trading as their main source of income for handling the payments of recurring bills through this income generated.

Assess yourself

Before getting all out for the trading career as a full time job, a very basic exercise for assessing oneself should be carried out. Trading involves the whole personality of an individual and therefore it is very important to make an assessment that how one could handle the various ups & downs of trading. This could be achieved by doing paper trading. In this way you do not put real money at stake and take positions. You just take trades on paper and follow all what happens after taking the trade. Analyse every aspect of the paper trade in the context of real time scenario. Think over of what could have gone through your mind if this was a real position. Try this thing for several days & several paper trades. You will surely be able to test your patience and aggressiveness through this exercise.

Losses Are Inevitable

A very bitter reality in trading for a living situation is that no one can evade losses while trading. Anyone who claims that he/she has never faced a loss while trading that person is just trying to act over smart. Losses are a part & parcel of trading and every trader has to accept this fact respectfully. No matter how much study you do and put in your 100% efforts, one thing which cannot be lied is that you will have to face losses. So be prepared for accepting losses in your trading.

Discipline Is Absolute Must

The foremost attribute required for successful trading career is discipline. Even a bit of deviation from discipline can have lasting effects on the overall performance of a Trader. Trading for a living is based on the foundation of absolute discipline. A Trader who is not disciplined is merely acting as a gambler. To put your money on the table you need stone carved rules to be followed and that too very religiously.

This is a slow process

Some people are of the view that as they start trading they will make money from day one and then they will have a cruising luxurious life. This is the biggest myth one can rely on. Learning to trade and achieving the stage of a Trader who could proudly say that he is successfully trading for a living consistently is a very slow and gradual process. The learning curve involved in trading takes several thousands of hours. To perfectly carve a niche in trading a good amount of patience is required. Before jumping on the assumption of easy money one should clearly give a thought about the process involved.

No Short Cuts Allowed

Amateur traders often have a tendency to find shortcuts for achieving success. This is absolutely not possible, trading in itself means following a proper path for the achievement of success. You will have to do the homework each and every day regularly to execute your plan. Different stages have to be followed which involve the creation of a plan, following the plan and executing it. Keeping a trading journal is one such task which helps in analysing the before and after of an executed trade. Taking positions in the share market is the last thing in the whole process of trading preparation. Before this stage a rigorous homework is required to come to the conclusion of what positions have to be taking. So one should be really ready to accept the truth that trading everyday is just like a full-time job.

Don't Go On Rumours

If you are in a dilemma of whether trading for a living is possible or not, never rely on narratives. Do not pay much attention to what others have to say. There are always a lot of rumours floating around about the success stories of big traders. Many people will say that a Trader has lot of free time on his hands because in very few hours he can make a lot of money and then enjoy the whole day relaxing. This can be possible but only for those who have dedicated lot of time in grasping the in and out of the whole game of trading. This lot of time means rarely around thousands of hours of study, of ups and downs of emotions, of frustration, of losses and disbelief.

If one could accept these six facts and then test his/her personality as per the rigorous requirements needed for trading and then finds that he/she will be able to overcome all the difficulties then only he/she should finally think about accepting the prospects of trading for a living.

10 Commandments of Successful Trading

Division of Risk Capital Into Equal Parts

Risk Capital is the amount of money which a trader is ready to use in trading with the fact well known that the whole of the capital can also be lost in trading. This requires intelligent money management. Capital must be well divided in equal parts so that all the money is not put at stake in a single trade. Not more than 1/3rd of the capital should be used in a single position. This is to make sure that even if the position goes against the trader, the losses are manageable. Some spare capital should always be kept as liquid money for spontaneous opportunities created by the stock market for entering into a position.

Trading in Active & High Volume Stocks is beneficial

A Trader should generally make a point to trade in those stocks which are traded on a large scale by many traders and as such they are more active and  their trading volumes are high. This makes it easier for the trader to enter and exit from a trading position as ample liquidity in the stock makes it possible. A low volume stock can create problems as low liquidity may get the trader to get stuck in the stuck and this may result in a loss as stop loss levels might not be traded by others.

Trading Plan is a must for a trader

Trader is always advised to make a trading plan in advance of taking a position with clear cut entry, exit and stop loss levels. his helps in defining the trade as per the targets and loss taking capability. Without a good trading plan a trader might make small profits because of early exit from the trade or may incur huge losses because of lack of undefined stop loss levels.

Trading Should be Judicious

A trader should very well be aware that trading should be done in a disciplined manner and over trading should thus be avoided. A trader after making good profits in a few positions might tend to take heavy positions and thus might risk the capital with over exposure. If the trend of the market goes against the position of the trader it might result in huge losses because of unmanageable trading position.

Trading should be done in manageable number of stocks

Trading should be done in such a manner that it does not make a trader confused on account of too much positions. A good trade is that even if the position is held in 2-4 stocks at a time the Return on Investment ROI is good 12%-15% rather than taking position in 15-20 stocks but the ROI is 3%-5% on account of variable performance of the numerous stocks. So few stocks with good prospects are better rather than more stocks with meager performance.

Also READ : Trading Journal : The Must Have Tool

Good Trading System includes Short Selling

A Trader is expected to be free of bias. This requires that as the opportunity commands a trader should be able to accommodate his/her trading plan accordingly. This means that a trader cannot expect of having only a long bias i.e only think of buying. A trader should also be open for taking Short positions. Short Sell is quite handy at bearish times as a trader is able to reap profits from bearish conditions also.

Confidence is the key for successful trading

The greatest enemies in Stock market are emotions of fear & greed . Both these emotions are really powerful and have the capacity to cloud the judgment of the trader in a negative manner. A trader thus should get out from the grip of such emotions and should make it a point to base his decisions of trading in accordance to the trading system which requires confidence in it. A confident trader is more likely to succeed than a trader who may have a good trading plan and system but his decisions are marred by emotions of fear or greed.

Profit on every trade is not possible

As the market is supreme and also said to be always right so the outcome is that no one playing in the game organised by market can outperform the market always. A trader is always ready to take losses in anticipation of profits. The only thing is that the success ratio will only be good when a trader plans his loss according to his/her capacity. If the loss making trades are controlled through stop loss and the profit making trades are genuinely given time to reap good profits then a trader can aptly said to be a good trader. So a good trader should always be ready to face losses in some positions accepting the fact that every position cannot be a profit making position.

Part Booking of Profits is a boon for accumulating capital gains

There is a need of continuously monitoring the situation of the open positions in the market. A trader who is in profitable position must be watchful and should be open to take part booking of profits thus accumulating capital gain through positive trades. The rest of the position after part booking should be given time to reap more and when the targets are achieved then the trade should be successfully closed . The concept of part booking is beneficial for locking in some profit so that the objective of the trade remains on the right path till the achievement of the target.

Keep aloof of rumors

All the advisors, market gurus, analysts who are overboard in making forecasts about future prospects of a company, stock market have their own vested interests and sometimes some information is specially floated to be taken by innocent investors and traders as true . A trader should be vigilant enough of remaining aloof of rumors which are floated for some hidden purposes . The decision making of a trader should be unbiased and based on purely seen variables rather than some anticipatory aspects.

“ Average investors who try to do a lot of trading will only make their brokers rich.”
      -Michael Jenson, Finance Professor -Harvard.

Intraday Trading : How Much Profit Expectation You Keep ? Magic of Leverage

Intraday trading inspite of being a difficult terrain brings lot of opportunities for the traders.For an intraday trader profit expectation is a very dynamic concept. The sudden changes in market conditions play an important role in increasing and lowering the profit expectation of a day trader.

If we take the example of NIFTY Index Futures trading we can very well calculate that what excellent opportunities the market offers a day trader to earn a whopping income.The requirement though on the part of the trader to generate good profits is sheer discipline.

When a day trader thinks of profit in terms of percentage then 1% profit per day seems quite good. This is a very genuine profit expectation of an involved trader as a trading for living concept would justify this expectation.

Now we analyse the reality of 1% profit after taking into account the role of leverage.In our example we take NIFTY Index Futures trading as our basic instrument for the purpose of Intraday trading. NSE has allowed a 10% - 11% threshold as margin for trading in NIFTY Futures.

So in current scenario when NIFTY is trading at 4700,1 lot of NIFTY consisting of 50 shares the value of NIFTY comes out to be 4700*50= Rs.2,35,000.If there had been no provision of leveraging, this was the amount we would need to trade in NIFTY Index Futures.

1% profit of 2.35,000 [capital required] amounts to Rs. 2,350. Now this means that we should get a 47 point profit in a day for achieving this 1% profit. As a disciplined trader this is quite possible consistently but for a starting out trader this capital requirement is a bit on the huge side. 

We should now take into account the magic of leverage which allows a trader to trade in a higher value instrument at a 10%-11% margin money of the total capital required. So 10% of Rs. 2,35,000 is Rs. 23,500 . Normally this will be the amount required for a trader to trade in NIFTY Index Futures allowing a trader to deal in big money inspite of less capital.

Now lets see that if a trader gets a 47 point profit that is Rs. 2,350 with the disciplined approach what is the actual profit percentage . This calculation should be done on the actual capital employed for the trade i.e. Rs. 23,500.

So 2,350 /23,500 *100 = 10% profit. So a 1% profit expectaion in a NIFTY futures trade actually is a 10% profit percent or ROI on the actual capital employed. This is the real magic of leverage. But same applies in the case of a loss too as the loss % is also magnified on account of leverage.

A trader therefore should be realistic and be disciplined in approach . The foremost thing which should be kept in mind by a trader is to cut one's losses and let the profits run.

Stock Market Tips : Blurring the Vision of a Trader

“I know from experience that nobody can give me a tip or a series of tips that will make more money for me than my own judgment.”   - Jesse Livermore.

 Trading is an art and a science. Art in the sense that lot of psychological aspects are involved while trading. Science in the sense that there are many universal truths about trading which are time tested in similar conditions presented by the economic environment time & again .

Therefore a trader who understands this science and art of trading relies solely on own judgment. A person who wants to seriously make money will definitely think solely about his/her own benefit as this is the soul behind understanding things.

When a trader enters the market arena he/she is confronted with stock market tips experts. The promising adverts of the so called experts are like the fantasies of a red carpet walk into an open treasury. The treasury is not guarded and the trader is free to enter and pick the amount of money as he/she think fit.

The amateur traders and mostly the greedy community of them are perfect trap for the tip generators sitting eager to churn money out of this greed stricken mob. The stock market tips promised by the so called market gurus are nothing but a farse.These tips do nothing good but blur the vision of a trader in hope of getting rich quickly, but actually what happens is that the stock market gurus get rich quickly with the money earned as their fees.

People should think practically and should try their best not to fall as prey in the trap laid by the failed traders who were not able to make money from the stock market and so start a new stream of income through advising about trading and making money out from those who think that tip experts are sitting for the benefit of others.

Successful Trading-6 Times Out Of 10 Is No Joke

In this business if you're good, you're right six times out of ten. You're never going to be right nine times out of ten.

-- Peter Lynch

This quote is right to the fullest as far as a human trader is concerned. People enter into markets with a belief of making fortunes in the shortest period of time. But as soon as they are able to confront the intricacies of the market they feel the pinch of reality that they have entered into one of the most
difficult arena of making money if not the most.

One who thinks that his luck works because as a gambler he won many bets that can be true till he was betting but when the same person enters the stock market and tries the same luck with the touch of gamble but the luck just betrays him as an enemy. Reason - trading is not gambling.

Trading is not for gamblers but for traders and for those traders who have the ability to learn from their faults and take them as lessons. Luck can help to a certain extent but cannot take thus far that it can be thought as the only factor responsible for making money in stock markets.

A trader will have to learn the long route way and this needs perseverance. Lot of time and energy has to be invested apart from money. With all this dedication if someone could achieve 60% accuracy in the trading results then he is a true trader. Nothing less than honest hard work is required for success with a part of luck to play as well to become a real trader.

ALL THE BEST TO THE READERS IN THEIR ENDEAVORS.

Trends In A Stock Market

 Accumulation: This is recognised as the first part of the trend, where traders get interested about a security and its prospects for moving up soon. They open new positions or add to the already existing ones.

Continuation: This can be classified as the main phase in the movement of the security. Here, the trend moves along nicely, with no unusual price action. The highs in the prices of the security  get higher in an uptrend, and the lows of the prices get lower on a downtrend. A trader will be able to make money, but not big money, following the trend in the market.

  

Consolidation: Consolidation is also termed as congestion. This is a sideways market.The security moves within the trend, but without achieving higher highs or lower lows. It just tend to stay within the trading range. Consolidation phase is a really opportune time for scalpers, who make a large volume of trades in search of very small profits.This phase can be extremely boring and cumbersome for everyone else.

Retracement:  Also called as correction or pullback. This is a secondary

trend, a short-term pullback away from the main trend to the support

level. Retracements create buying opportunities, but they can also kill

day traders who are following the trend as they might tend to make wrong entries in the trade.

  

Distribution: In the distribution phase, traders are of the view that the

Security has done its bit and it can’t go up in price anymore. Hence, they tend to sell in large

volumes. This culminates in a downtrend finally for sometime.

Reversal: This is the point where the trend changes from the main trend continuing since a long

time. It is the most appropriate time to sell if an investor or trader had been following an uptrend

and buy if one had been following a downtrend.

It is highly important for traders to identify various trends in the market at the right point of time for making fruitful decisions.

What Sort Of Trader/Investor Are You?

An Interesting Article Written By Andy Richardson

I started investing in New Share Issues in the 90's and for a while that's all I did. I can't remember why I stopped but that sort of fizzled out, perhaps wrongly.

I got into techs and learned some hard lessons.

Then I flirted with 'blue-sky' - oh I don't even want to go there and nor should you, unless you've got bags of money and bags of time. TDM, MDX, algorithms for sirens and even deck-chairs. Oh, brings back bad memories...purge purge purge.

Then I started buying value but I didn't have the gold touch, nor did I have patience or conviction so I tended to buy high and sell low. Doh. Not a happy time.

Then I leaned towards growth because it's so tangible you can almost touch it. Is it hard to find a winning sector and winning stocks within a sector...it's not.

Along the way I got caught up with technical analysis, allowing myself to be convinced that there was a black-box solution to the trading challenge (I wanted to say problem but that would have been so 1980's). But I found no such solution and, like Richard Farleigh, I have yet to meet a wealthy chartist. Well that's not true, I've met plenty but they all sell their services via newsletters/seminars and the like. Did you know that The Society of Technical Analysts has ALL their money in cash and doesn't trade it!? Laughable or what. I digress. So I settled for a simple use of charts: to confirm a trend and to give me advance warning where the hoi polloi might enter and exit. Add to that a dollop of moving averages and the RSI (I have no idea, I just try and not buy a share when the RSI is less than 50) and that's as much use as I can find for them. Cycle man determined to convert me so I remain open-minded.

So in the time-line we've gone from 1990's to May 2006 (I started this for real in Aug 2005).

And after much messing around I was left with a chart with a trendline and a liking for growth stocks. Hello momentum. And that light came on about July 2006.
Then I happened to have a long discussion with some nice chaps about market-maker stocks and that got me thinking about how one could sway the odds of trading in one's favour.

…and so I became a momentum trader of small-cap stocks.

Well…that was until small-cap stocks stopped moving.

But that hasn't been a problem because I just took a deep breath and started looking for things that are breaking out. I've posted re CAB.

And as soon as I am sure we are in a bear market I will start to short but I really need to see that downwards trendline confirmed first because I don't want to get caught up in all those short-closing rally thingies.
So I suppose my trading style is sort of evolved and continually evolving.

So I would say that everyone has to find his own path. To figure out what sort of trader/investor you are, you need to throw an awful lot of mud at the wall and that can result in losses. I don't think the process has a shortcut, you just have to do the time and hope that you find, chance-upon, discover a method that works for you and makes you money.

Read more on Andy's spread betting journal at http://www.financial-spread-betting.com/

Article Source : http://misterarticle.com/

Author Resource : Financial-spread-betting.com monitors and reviews spread betting sites like IGIndex and CMC Markets so you know which sites offer the best experience for you to spread bet at.

Importance Of Technical Indicators

Trading is done to gain profits. This means that the plan of trading is to work in such a way that our trades generate maximum profits and minimum losses. Now for this there will be the necessity of certain rules and principles which needs to be followed so that trading becomes easier. Trading cannot be based on sheer intuition or gut feeling; neither it can be a process of continuous hit & trials.

Then what is the path which a novice trader has to follow to become a successful trader? The answer to this is Technical Analysis. Technical Analysis is the root of trading where after skillful scanning of various trading possibilities a trader makes a decision and takes a call on his/her trade.

Fortunately in our era the work of technical analysis has been immensely simplified through means of various high performing Trading Softwares. Such automated softwares just need the data to analyse and within fraction of seconds they will provide the clear picture of the current scenario regarding the stocks, indices, stock market as a whole. Trading Analysis is based on various Technical Indicators which are made up of various mathematical formulas. These indicators can be understood and technical analysis becomes lot easier. The trading softwares come with various integrated indicators.

Various intellectual people with their long trading experience have provided various technical indicators which when applied and used correctly helps a trader to make timely and right decisions. To name a few technical indicators which are very popular among the trading community are Relative Strength Indicator[RSI], Stochastic Oscillator, Pivot Points, Moving Average Convergence Divergence[MACD], Average True Range[ATR], Williams%, Accumulation/Distribution etc., the list is long and continuously new indicators are being added as further research is being done by various expert traders.

A trader has to be very precise in using these indicators as analysis is at personal level through the support of these indicators. Indicators are like guidelines and the path has to be carved by the trader. Trading is quite difficult in real terms but made quite understandable with aid of technical indicators.

Futures Trading In Indian Stock Market - Part III

Question:  How does expiry of Futures contract affect the Trade?

Answer: In this example you bought January Futures contract of stock “A”  say on January 6th and have not squared up [closed the trade by selling the shares] till the end of the month. On 27th January, your Futures contract will be compulsorily squared off at the cash market price of stock “A” on that particular day which may or may not be in your favour and your profit will be paid out or deducted from your account as the case may be.

 Here one thing more has to be kept in mind that the Futures Contract position is settled everyday and so profit or loss amount is adjusted everyday accordingly and so on the expiry day the final adjustment of the profit or loss is done and that day the final net profit or loss can be calculated on a particular traded contract.

Question:  In addition to leverage, is there any other benefit of Futures Trading ?

Answer:  An excellent advantage of Futures Contract is that you can sell Futures even before buying for which the term used is SHORT SELL. This can be understood with our example of Stock “A” futures contract that even if you do not have any shares of company “A” you can still sell them without buying. So this means that if you expect the price of the stock “A” to go down from Rs. 280 to Rs. 240 in some days you can SHORT them and if your trade is a winner then you will keep the profit of Rs. 40 per share by squaring up [closing] your trade by buying back the shares. Thus, you can even benefit from a price fall of the stock “A”. This is not possible in the Cash market where you have to buy first and sell second called as LONG TRADE where as in Futures you can even sell first and buy second called as SHORT SELL TRADE.

Read Part I

Read Part II

Please Read Disclaimer:

All the opinions expressed on this blog are for educational purpose only.The strategies mentioned on this blog may not be suitable for you. Material presented here does not take into account your particular financial situation, investment objectives and is not intended as recommendations appropriate for you. You must make an independent decision regarding strategies mentioned on this blog.

Futures Trading In Indian Stock Market - Part II

Question:  Are there any risks involved in the Futures Market Trading ?

Answer:  The risks of Futures trading are that losses will also get multiplied in the same manner as profits do. For example, if the same stock “A” drops from Rs 280 to Rs 260 in that period of time, you would make a loss of Rs 20 per share which amounts to Rs. 10,000. The Rs. 20 per share loss would translate to an 11% loss in the cash market with total money buying and a whopping 35% loss in the Futures market.

Question:  How can one be able to reduce such huge losses implied in Futures Trading?

Answer:  To effectively reduce/minimize such losses you have to be vigilant about the market. Suppose, you are bullish and you hence buy Stock “A” futures. But Stock “A” futures start moving down after you have bought. You can square up your stock futures position at any point of time thereafter. You can buy at 10:30 in the morning and sell off at 11:00 on the same day. There is no restriction at all.

Concept of STOP LOSS. One of the great feature in Futures trading is Stop Loss. This is a feature where you can place a STOP LOSS order in the stock exchange system which will limit your losses if the trade goes against you after execution. In this example of ours where you have bought the Futures of Stock “A” at Rs. 280 per share expecting it to go to Rs. 330 and at the same time you know that you can only afford a maximum loss of Rs. 10 per share i.e. Rs. 5000 on a single lot of 500 shares if the trade goes against you. So what you will have to do is that you will place a Stop Loss order of Rs. 270 so that if unfortunately the price of the stock goes down the system will automatically square off your position and get you out of the trade restricting any further losses.

Question:  What is the limitation of Futures Market in comparison to Cash Market ?

Answer:   There is a limitation of Futures market when compared to Cash Market and that is in the form that Futures expire on the last Thursday of every month In cash market there is not expiry date and you can keep the shares as long as you please and also there is no minimum number of shares which have to be bought in the cash market as has to be done in futures market in the form of FIXED LOT of shares of a particular Stock as decided by exchange. Expiry of Futures contract means that January Futures will expire on 27th January (if 27th is the last Thursday). At the same time Stock Exchanges also provide a better opportunity by running more than single month Futures. Like for example a person can buy the Futures Contract of March month in January itself and this March Contract will expire on the last Thursday of March.

Read Part I

Read Part III

Futures Trading In Indian Stock Market : An Introduction

When you want some extra returns on your disposable capital [idle money] then you take advantage of investing in equities market. Suppose you are bullish [expectation of price appreciation in the market price of the stock] on the stock of company “A”, which is currently quoting at Rs 280 per share.You expect that within one month the stock price will touch Rs. 330 per share depending on various factors playing role in the market for this respective stock.

Question:  What do you do to get benefit from this Bullish expectation for a particular Stock ?

Answer:  You buy a particular number of shares of this stock “A” at the current market price i.e Rs. 280.

Result:  The Stock price touches Rs 330 in a month’s time just as you expected thus you made a profit of Rs. 50 per share on an investment of Rs 280 per share i.e. a Return of 18% in one month – This is good profit earned from your trade.

Question: Can this trade get any better?

Answer: Definitely Yes.

Question: This is amazing but how & for that what should you do?

Answer:  Buy Stock Futures of “A” instead buying the stocks in cash. However one thing has to be kept in mind that in Futures there are fixed “LOTS” of shares which could be purchased. These lots differ for different companies according to the current market value and volatility of the stock. In our example of this stock “A” we will perceive that the Futures contract of stock "A" has a single lot of 500 shares.

Effect:  Now comes the benefit of buying Futures contract.On buying the Futures contract, you get the same position in shares of company“A” as would have been in the cash market, but you are required to pay only margin money for the shares you are buying and not the entire amount as otherwise needed in Cash market. For example, if the margin for Stock “A” is 20%, you would have to pay only Rs. 56 per share for that LOT of 500 shares. If “A” goes upto Rs. 330, you will still earn Rs. 50 per share as profit but the best thing is that you will have to commit only Rs. 56*500 shares = Rs. 28000  and not Rs. 280*500 shares which amounts to Rs. 1,40,000 in the cash market for delivery based trade. Now that translates into a fabulous return of 89% in one month on the amount of capital committed.  This feature of Future Trading is called LEVERAGE. This is simply amazing. A clear cut 4x profit return as compared to the same trade in cash market.

This is the advantage of ‘leverage’ which Stock Futures Trading provide. By investing a small margin (ranging from 10 to 25%), you can get into the same positions as you would be able to acquire in the cash market. The returns therefore get accordingly multiplied.


Read Part II

Read Part III

How To Choose Best Broker For Online Trading

To start trading as an online trader one has to make a very important decision regarding choosing a reliable brokerage firm so that the trading goes on smoothly. A lot of brokerage companies will be available to choose from in the market but you will have to be deft regarding finalizing the best one for yourself.

Here are 10 considerable factors you'll want to go through:

Whenever you start searching for a broker do not take into account any kind of discount being offered for opening an account. This may be a luring tactic otherwise.

One very important factor for trading smoothly is that the website of the broker should be fast. Access the websites of the chosen brokers at various time periods in a day and especially at the peak hours of exchange time so that a live performance could be assessed.

Make sure to gather information that apart from online trading facility what other kind of services a broker is offering for letting you trade. This may include IVRS placement of order, manual order placement through the dealer. Also confirm about the service charges for all services.

Try to take opinions about various brokers. This could be through word of mouth or even by joining various forums on the net about trading. People who are already using the services can provide a deeper insight.

Pricing factor is important but do not go only the price factor. Only low brokerage rates cannot be considered for finalising, as the service quality is foremost as trading for being profitable needs obstruction free service.

As the trades involve various kind of order placements like delivery based trading, futures trading, options trading, intraday trading, commodities trading etc., so be alert in knowing the commission rates for each and every kind of trades.

Better know in advance about the minimum deposits required for opening an account and also minimum maintenance amount to keep the account active. Exorbitant minimum amount requirement should be avoided.

Some brokerage houses are more inclined towards investment products like mutual funds, bonds, securities, SIP’s etc. rather than trading so better first enquire about the products you are choosing.

Customer service is an important aspect so make an attempt to infer about the customer service performance of the broker. This can be done by discussing it with members of the brokerage firm about how they rate the customer service. You can also try to infer through some initial calls for understanding the behaviour of the customer care executives of the firm.

Some brokerage firms offer various software packages which could be really handy for better trading outcome. Try to grab information about the various technical advantages of the software being offered. A company which provides operating terminal for trading may tend to charge more for it so a comparison is required for various options of software available at different brokers.

Try to figure out what extra edge is being claimed by the brokerage firm in comparison to other firms and then decide about the edge to be a genuine one to be selected for.

Do remember that trading decisions are important but equally important decision will prove to be the selection of a brokerage firm for a fruitful trading performance in the long run.

Online Trader Should Follow These Rules

There can be some very petty incidents which can turn Trades disastrous for trader even everything done by the trader was right in execution of the trade.

You can easily follow some basic practices which can get you out of an unwanted ugly situation created by an incident coming like a bolt from the blue.

I hope these useful tips will help you in making your future trades more secure.

1. One important thing to remember while trading is to have the name of your broker [relationship manager] and the dealer desk phone number along with your account number always close to you while trading. This will ensure that if there is a power outage or a problem with your computer like an OS crash or something hard to handle then you can still get out of a trade with the help of placing the order with your broker.

2. If you use a desktop computer then it becomes more important that you have an uninterrupted battery backup on your computer. The power outage will not then affect your trade considerably and you will also be able to save data and take action on time to secure your open position.

3. Try to keep two net connections with you so that if one goes down then also you are not affected and you can run up your terminal on the second internet backup connection.

4. Keep a mobile phone as a backup to your land line phone.

5. Keep a piece of paper and pencil with you so that you are able to jot down important points about your trade if you are in a learning phase.

6. Make sure to double check the filled information while placing the trade so that it can prevent you from placing a wrong trade unknowingly like you may see on your second check that you may have filled 3 contracts instead of 1 contract. This error can cost much.

7. Last but most important is to place a STOP LOSS the minute you have entered the trade. DO THIS ALWAYS. It will be like a cushion against a wrong trade.


Quote :

William J.O’Neil “ 90 % of the people in the stock market, professionals and amateurs alike, simply haven’t done enough homework ”

Trading Will Be Just Like Gambling Without A Plan

A gambler goes into a casino and put bets on various speculative games to win multiple times of money which is being put at stake. There is no plan behind such gambling and it is just a sheer test of one’s luck in winning money. The odds may favour one day and the other day might go against.

Similarly if a trader starts trading in the money market without any basic planning then he/she could be easily equated to a gambler. Trader for being called a successful trader has to compulsorily shed the gambling instincts. Luck can favour trader and bring good money at times but this is not bound to happen always.

Trading in Stock markets need lot of hard work in making a successful trading plan and strategy. Considerable amount of time is needed in researching and concluding a trading plan for oneself. One style of trading is not necessarily appropriate for everyone and so an individualistic approach is needed to chalk out a strategy which best suits a person.

Lot of factors like available trading capital [disposable extra money], emotional stability, risk taking capability, understanding of one’s own needs and expectations, understanding of money management techniques, psychological aspects etc. go into developing a trading plan.

Trading should be treated as a business and not like gambling so just like any other business trading should also be based on sound financial planning and money management techniques. It has rightly been said that Plan your trades first and trade according to your plans.

Quote:

Evel Knievel “ Risk is good. Not properly managing your risk is a dangerous leap”