How to make profitable trades
Making Profitable TradesIf you are looking for trading success and want to achieve regular profits then this article is for you. This article will help only for serious and dedicated people wanted to achieve success in trading in share market.
Based on our experience we have written this article.
Without having trading plan it is not possible to achieve regular profits in share market.
If trader is serious and wants to be professional and earn regular profits then trading plan is compulsory. Once the trader gets experience then he can manage anyhow to generate profits but till you get experienced it is vital to have trading plan.
Trading plan will help to gain regular profits by minimizing losses at the end of the month/quarter/year. Finally trader will end up doing handsome profits.
How to prepare trading plan?
Before working on trading plan, let's see some facts about trading and share market.
a) It is not possible to trade everyday and gain profits because markets having various influences and no one have control over it. So it is advisable that traders should not enter into market with the mind that he will make profit on that day at any cost. But in fact he should make up his mind that he will trade only when opportunity comes.
Traders should not misunderstand that every day is trading and profitable day.
b) Initially traders need to spend minimum 4 to 5 hours to learn. But it all depends on how traders manages and put his time into trading. But the calculation is more the time you spend into market the more you understand the market. During learning phase the trader has to put more time to understand the market.
c) Trader should be ready to accept losses for a particular day. Losses are always around the share market, so don't think that the trader makes profit everyday.
If trader understand above 3 parameters then it is easy to enter into share market trading without hesitation.
Now let's see how to prepare the trading plan
Basically before the start of the market the trading plan is prepared.
The following steps are based on our experience.
1. Take one notebook and name it as trading book for noting down your daily activities that we are going to discuss in coming sections.
2. Make a note of Indian and international market status
3. Make a note of companies news/updates
4. Make a note of yesterday and today's hot stocks
5. Practice paper trading
6. Make note of your experience for analysis and experience
Let's see the how to work on above points in following section
Initially it may take time for new comers to adopt this strategy but no gains without pains and as time grows the trader becomes experienced and this process may become very short then much more anticipated.
1. Dedication and seriousness is must for any success so it applies to trading as well. Put one notebook for noting down all your daily trading activities.
The book will help you to maintain your market experience and also gives you guidance how to approach and react towards particular news, stocks announcement, etc.
2. Let's make a note of global markets status
These global markets play very important role in deciding the Indian market
USA markets - opens at night 8 PM according to Indian standard time
Two major indices
Nasdaq and DJIA (Dow jones Industrial Average)
To check the status you can visit www.nasdaq.com and make the note, whether they have closed positive or negative and by how much points.
The Asian markets open in the morning at 8 AM.
Mainly you can note down the status of following Asian markets
Hong Kong's Hang sang
Singapore's straits times
Taiwans Taiwan weighted
To check the status you can visit at below link and make note whether they have closed positive or negative and by how much points. http://in.finance.yahoo.com/intlindices
Finally Indian markets open at 9 AM.
India's two major indices are Nifty and Sensex
Mostly it is observed that based on above markets status our Indian markets open.
Based on all above global markets trader can make a note how Indian markets are going to open and proceed ahead.
Make a note in your trading notebook.
3) Make a note of all Major Indian and International news like political, economic, any major big good or bad news.
Make a note in your trading note book.
Resources - www.business-standard.com, www.economictimes.com,
4) Make a note of all major Indian companies announcements and updates like
Important note - Around 30 to 40% trading opportunities are generated from below news and updates.
Make a note in your trading note book.
a) Companies mergers, takeovers, stake sale, listing, delisting
b) Declaration of profits, revenues, Bonus, dividend, stock split, these announcements basically happen during quarter results.
c) Companies expansion plan, business diversification, winning orders,
d) Promoters stake sale, stake increase and decrease,
e) IIP (declared numbers once in month), Inflation (Every week on Thursday)
f) Increase/decrease in crude oil prices
g) Any sort of Government intervention especially in sectors like oil, agriculture, steel, banking, mining, textile, sugar
Source : www.business-standard.com, www.economictimes.com
5) Make a note of yesterday and today's hot stocks
If trader watch and makes a note of stocks belonging to above category then we are sure trader will find various trading opportunities.
It is important to keep watch on stock move and understand how they react and this may take some couple of days or weeks to understand.
Finally the trader can make the list of stocks to watch for trading purpose.
Now the important step is just to watch the stock price.
Trader need to see which stock is going where and how news are affecting the stock prices. The observation is very important and once you understand the stock movement then no can stop you from making profit. You can even months to do observation and analyze the stop price because if you understand this then there is nothing much left in trading and make profits.
6) Paper trading practiceOnce the stocks are short listed for watching then the trader can start doing paper trading practice.
All profits and losses will be on paper and not in actual, so need to worry so do fearful trading and fell the market and understand the stock movement.
To Maximize profits follow "small profits and multiple trades" strategy.
7) Make note of your experience for analysis and experienceExperience is required to succeed.
If trader spend minimum 4 to 6 months by following above techniques and strategies or if trader start generating profits through paper trading in any month then he can start trading with actual money.
Instead of calculating profits on daily basis, calculate the profits on monthly basis because every day is not trading day so profits will not be generating on daily basis.
Add up your daily profits and find your monthly status.
Generally at least minimum for one to two months the profits should be generated through paper trading practice then the process will generate the confidence in trader then he can start trading with actual money.
Above trading plan/strategy is based on our experience which is workable solution and generate profits.