Three rules to succeed in trading

Trading is a tough job and 90% of traders will becomes loosers in trading. Recently I have read about these trading rules in a website. I am sharing that information for the benefit of traders.

Follow trend

Trading in the direction of trend is the success secret of many traders. Generally a trend will continue for many days whether it is down trend or uptrend. Buying in dips in uprend is a good strategy for making money. Down trend is generally benefit for options buyers and futures traders because in options and futures we can go in both directions. In down trend we can't predict bottom and in uptrend we can't predict top.

Money management and minimizing losses

There is a rule trading that don't loss 1% of capital in single trade, for example if we have 100$ then we have to exit from a trade when there is loss of 1$. Stoploss in trading protects our trading capital and we have more chances to trade. Some people put their whole capital in a single trade and loose 5 to 30 percent in a single trade so in few trades their total capital will becomes zero.

Trading discipline and emotional control

Generally many traders close their winning trade with few gains. For example if he buys a stock for 100$ he sells when it reaches 105$ because of fear but he miss the total rally of the stock, that stock may reach 150 or 200$ we can't preditc. Similarly when stock is falling he don't exit with stoploss becasue of greed. Some people do overtrading becasue of he wants to cover losses in this process he loose entire capital.