I am going to give you seven golden rules of trading. Well, whatever will tell you today, if you trade, then you have to remember them all the time. I am going to teach you these seven rules and in fact, there will be many people who will have more experience than me and they will also tell you to follow these rules because by following these rules, your loss will be very limited and profit will be maximized. So the first rule is that you should never trade against the trend.
Don’t trade against the trend. If you are going to trade, not against the trend. Now you know that the trend is up here, you know that there is a down trend, you know that there is a sideways trend. Now you know the trend. I can identify the trend and trade it in this way. I have already taught you. Now, what I mean to say here is that I will explain it to you in a little more detail. Let’s assume that the down trend is going on. Now the trend does not run like this. You know that when the trend is running, then you will see something like this. The price of the stock goes up, goes down, goes up, goes down and ultimately a trend line follows. So now when you see the trend going down, you are logged in your DEMAT account and have set your indicators.
Now you see a signal like this, you see a candle, which you think will move from here. Now the stock will not go down more than this. Now the breakout can happen from here. The trend can reverse from here. It may not have happened. You have traded and you have traded against the trend. I am telling you, this is my own experience. I don’t do this at all now. If the trend is in the direction, then you have to trade in that direction because trend is your friend and if you trade against the trend, you will have a loss.
So in the starting, there are some trades that I have done against the trend and what happened, in most cases, there was a loss. So trend, I think you should follow this rule. In today’s date, I consider the trend as my friend and that is why profitmaking becomes easy. You have to understand that if you see the stock went down, then you saw it coming up a little bit, there was a candle or you saw an indicator that there was a crossover in MSED and anything happened, then the small things that are visible there, it may be right for you, but until the trend reversal is not visible on the chart, we will not trade.
This is rule number one. Now you can tell me what you think about it, but here will tell you the second rule. My words will sound a little harsh, but you have to remember that always trade in the limit. Every person has different limitations. You see someone’s profit on Instagram, Facebook, YouTube, you see a profit of 20 lakhs, you see a profit of 5 lakhs, you see a profit of 2 lakhs, I have to do it too. You have to do it in one day. Now, to make a profit of 2 lakhs in one day, a person was trading in 20 lots, but your limit was to trade in 2 lots, but what did you do? You broke your savings a little bit, okay, you took more lot or people take loans too.
You are going out of your limit and you are going out of your limit, you could have traded in2 lots, you traded in 20 lots. I will say it very clearly, it is possible that you will make profit, but you are going to lose all this money because you will not be mentally stable at all. When our limits, it is possible that I can afford a loss of 2 lakhs for me, it is possible that you cannot afford it, it is possible that I cannot afford a loss of 20 lakhs, someone can afford it. So everyone has different limitations. It is very important to identify your own limitations here. If someone, suppose, the loss of 2000 will not give you much trouble, it will not disturb you mentally.
You can bear the loss of 2000, so you have to trade according to that. It is not that you saw someone trading, hews trading in 50 lots, I will also do it. I have invested all the money; a lot of money will come. I do not know if that money will come or not, but I know that if you go out of your limit, then you will have a big loss that you will not be able to bear and then you are in the market.
So there are options traders, who trade in options. In fact, there are intraday traders, their life is very less because the day they have a big loss, they join hands that the stock market is gambling, I will never come. Actually, you made gambling.
The intention with which you went towards leverage was your intention that become a millionaire in a way, I become a millionaire overnight. This does not happen. This is a game of discipline. You have to understand that money is made from discipline in the stock market. Money is made from discipline. You are trading, you have to do it with patience and here comes rule number 3, which clearly tells you that never be in a hurry to trade. What do people do a hurry? When they get time, let’s say they are in the office, they have got time for half an hour, one hour, they have to trade now.
It means half an hour, now they have to trade. You can see something, you can’t see anything, youkan sees something while trading. You are not seeing anything. You just open the stock, you are looking at the line chart, you are looking at the candlestick, you are just looking at what is being made. Once you see a candlestick pattern, you are seeing the price action, you are seeing that let’s say that the stock has broken the resistance, you are seeing it, along with that, an indicator is also telling you something, RSI is telling you something, MACD is telling you something, moving averages are telling you something.
After seeing all this, when you are getting multiple confirmations to trade with patience, if you trade then you will earn money. But if you only trade on feeling, you will trade on hurry, that you have to trade inane hour, what is important to do, if you have to do it, then trade in an hour, then do paper trade, you will find out how much accuracy you are getting. Until you get multiple confirmations here, with patience, you can see that the market is open for you from 9.30 to 3.15trading.
If you have taken 3 to 4 good trades in the whole day, it is enough, you do not need to take 20 trades, you have to take time for 3 to 4 trades. It is not necessary that9.15 market is open, I will still take the trade, not required, there is no hurry. If you are coming here in a hurry, then you will go in a hurry and if you trade with patience, then you will earn with patience. It is your choice what you have to do. So this is rule number 3 golden rule that never trade in a hurry, there is no hurry.
If you want to make it your profession, then you have to bring patience. Now let’s move forward, thesis very important that you will never average in the losing side. Now what happens, people take trades, in fact, this is for investors too. You have invested in a stock, you started investing when the share price was 100 rupees, now it is 70 rupees, now you have a loss, you bought another share, it was 100 rupees, now it is 150 rupees.
Do you know what people do, they sell this 150, book a profit? You have booked a profit and here where you saw that the share of 100 rupees is 70, now you will say that I will buy more, I will buy more, then my average will come, the average will come at 85, now my average is at 85, then what they see that the price has broken, it has become 60rupees.
Okay, let’s buy again, let’s average it, now let’s see, it has become 40 rupees and can give you many such examples. In fact, it is not that all the things that I am telling you, I am telling you from my experience, I have also made these mistakes and mistakes are made, so mistakes are learned. The price we were looking at the share, the share that was running, we sell it, so outrunning horse, we sold it and our lazy horse, we are feeding it chickpeas, you will run, you will win, the one who was going to win, we sold him, the horse sold and our lazy horse or the sick horse, we are telling him that you will win the race.
This does not happen. Ultimately, the company’s share is going up, it has many multiple reasons, you have to understand that there are many such shares that become multi-bagger, it can go up to100, 150, 150, 500, so there is no limit to going up and when it comes down, the share of 100 can be of 10 rupees, so there is no limit to falling down and there are multiple examples like this.
Vodafone is an example in front of you, yes bank is an example in front of you, the same thing happened in RBL bank and in fact, if I talk about increasing, you talk about Nestle, talk about MRF, if you talk about any big company, the company is fundamentally strong, it is performing, it is generating profit, it has to increase.
So you will see many such examples in the market that were not fundamentally strong and kept falling, but you did averaging, let’s average in the same trading. What do you doing trading, where there is a loss, you have taken a trade, you have taken a trade in options, let’s assume you have bought call options, you have bought call options, now call options all options are falling. You bought the option in 200 and it was left. Let’s say yours is of 140.
Now what will you do? I will buy again at 140 and it will go up from here. Then you saw the trend. Then what did you see? Did there be a breakout? Did you see anything on the chart through which you are going down again? So the first thing is that you should not do this. Generally, if you are doing it, then you should get multiple confirmations and if you trade in options, then definitely use strategies. There is a playlist on options strategy. If you make a strategy, then you will be able to trade better according to the risk to reward ratio.
So now you have understood that you never have to average on the losing side. So that was the fourth golden rule. Let’s talk about the fifth golden rule. I told you that never place a single trade. I am not talking about investment. Here I am talking about trade. If you are trading, you are trading in options, you are doing intraday, you are doing futures. Donor place one order, place two orders. Now what does it meant place two orders? We hear stop loss many times. Stop loss should be placed. Do you guys put it? Tell the truth. You do not put it. You think that if it comes down, then there will be a stop loss.
We will cut the deal. No problem, we will go out. Do you go out? No, we don’t go out. Because you think that when you see a loss, then our psychology changes. We cannot bear loss. We think that no, he will recover from here again and we will recover our loss. You make mistake here. Now let’s understand very easily. Let’s assume that you bought a call option and you bought that call option at a rate of 200. Now when you bought it, what did you see on the chart? It is very important.
Let’s assume that you saw a big hammer at the bottom of the chart. Now you saw the hammer, you immediately took entry. You also saw the next candle, which became Marabou. You saw Marabou being made. Now you are getting a strong confirmation that the price can go very high from here. Now if you get a confirmation, you took entry after confirmation. You took it at its high. Let’s assume entry. Now what did you consider as stop loss? You also considered the stop loss of the previous candle as low. That my stop loss is there, but did you place the order of stop loss?
If you did not place the order of stop loss, then it is not necessary that every time what you see on the chart, it works in the same way. Anything can be happening the market. It is possible that the price will go up a little bit from here and then come down and you do not have a big loss. It is possible that the trend at that time, what happens now, you saw that the hammer is made.
The trendies giving a sign of reversal, but it is not necessary that it happens every time. It is possible that the trend reversal will not be as strong. That trend will continue and if you think that the trend can continue, then your stop loss order was not there. You can have a big loss. So it is always necessary to apply stop loss.
That’s why don’t just place one order. Keep stop loss order with-it that you can avoid a big loss. We take a small profit and take a big loss. There is a big loss on this. So what you have to do is you have to understand that your two trades should be executed. One trade you entered in, whether it was your option trading or you did it in intraday or you did it in futures, but it is necessary to have an order of stop loss with it. So this was rule number 5.
Now let’s go to the sixth golden rule and that is that once you take a profit or you lose, then in both scenarios, again our psychology changes. When we have a good profit, then people come in the stage of extreme confidence. I am doing very well. You will feel confidence from inside that today is a good day. I will take more trades and there will be a profit. Now if your confidence, your psychology changes, that is, some people say that your brother has made a profit of 20,000 today.
Today we made a profit of this much. So at that time your confidence is very good. It is a good thing, but even after that, if you take one more trade, then the profit you have booked will also go somewhere. If this has happened to anyone, then do comment below. In fact, if you have a loss, then people come in a stage that it is loss, no problem, we will trade again, we will recover our loss. Here again the loss happened. After that, let’s do one more trade. Now if there was a profit, then we lost that too. And if there is a loss, then the loss is happening again and again.
So are we sitting all day? No, you have to understand a simple thing that this is a game of psychology. You do not just have to trade; you have life too. You may have your other work. You may trade-in part-time, if you trade in full-time, you have your family, you have to give it time. Your mental well-beings very important. If you have a good profit, then it is a matter of the day. You took profit from the market and left. On that day, learn to enjoy the profit.
If you have a loss, then do not come to this stage that I have to recover the loss today and leave. I will not leave after making a loss. Then if you do not book a small loss, then there is a saying, if you do not book a small loss, if you do not book a baby loss, you will face the mother of all losses. If you have not learned to book a small loss, then the loss you have thought can be a bigger loss. So do not do this and if there is a loss, then it is not that I will recover this loss and get up today. Shut down, brother. It is not the same every day. Sometimes Sachin Tendulkar also gets out at zero.
So this means that whether you have good profit or a good loss, a big loss, in both cases, you do not disturb your psychology. Your mental well-being is very important and here comes the rule number seven and it is in the continuation that you just understood that if there Isa loss, then do not trade for loss recovery. If you have a loss, you see that you have lost 10,000, now I will recover the loss in the market. I am telling you exactly, my friend and his relative were sitting together and trading. Trade happened and they lost 20,000-25,000in trade. They were trading with a good capital. I will tell you first that they had invested 7-8 lakhs rupees.
So according to 7-8 lakhs rupees, a loss of 25,000 is not considered a big loss according to the percentage, but if you see a loss of 25,000, then what does psychology say? Once my friend said to his relative that let’s book a loss of 25,000, that’s enough for today. The other person said, no, this will be recovered. In a little while, they were losing 75,000. Now what do you think what they would have done? Definitely, what we will all do that 75,000 is too much, now we will sit. Now, sitting and sitting, that day, the loss of more than 2.5 lakhs was done on a single day.
Now, within a day, a loss of 2.5 lakhs, means if they had good capital, then I am telling you that they are trading with 7-8 lakhs. They lost their one third capital in a day. Why? Because they did not want to earn that 25,000, they had to recover it and it was not recovered and after that loss after loss and in fact they did not wait, they made more trades. They made more trades apart from this, that it is not happening, let’s take one more trade, then let’s take one more trade.
Sometimes, even if you believe that my day is not good, my strategy is networking today, it is not working, then close the system, getup, but people do not get up and then a big loss. I am telling you the reality of a loss of 2.5 lakhs in a day and people have more losses than this. People do not show their losses, never show. In fact, there are many people on YouTube, they will not show a big loss, they will show a big profit first. I neither show profit nor loss.
Why? Because Idol not have to show you, I have to teach you. I do not have to inspire you, what is my benefit? You are trading, your benefit, your loss is your loss. I did not get anything in my pocket, nor did I lose anything from my pocket, but what I want is that if you are new today, then it is my duty to guide you and all these things I have told you, I have told you with my experience.
This has happened with people in reality and in reality, thesis nothing. You know that there are some people in the market who trade with loans, they keep their homes in debt, they trade and earn a lot of money and what happens to them, they do not live at home and they do not live anywhere and you do not have to do this.