In year 2010, for the first time I tried my hand at day trading. At that point of time, I had no mentor to guide me or prepare me before entering the world of trading thereby causing me financial as well as emotional stress. Today when I look back at those times where I struggled with the adversities of the trading world, I wish I had a mentor on whom I could rely upon and learn from but as it is also rightly said “Self-Learning is Best Learning.”
As I have struggled and experienced first hand the hardships of the trading word, I am very well known to the fact that more than financial loss it is the emotional loss that impedes people from entering the stock market. Understanding the obscurity of the trading world, with this post, I wish to help the fellow traders and also the novices who may want to know how to start and plan their journey towards full time trading in the Indian stock market.
Through this post I want to be the mentor I never had and I hope I would be helpful in starting or booming forward your journey in the Indian stock market.
This blog post will definitely help you in understanding the reality of the trading world by ticking five checklists that you need to abide by before entering the stock market. And I promise you that you will not miss chance to subscribe as upon subscription you will further learn the theoretical and practical knowledge of the Indian stock market.
Firstly, you have to ask yourself that why do you want to become a trader? If the answer is anywhere near to “Because it will provide fast money’ and for the thrill it may offer then you are clearly selecting a wrong profession. Have a basic clarity in your mind that why do you want to choose this profession.
The reason I am asking one to have this this lucidity is because the successful traders of the world have not chosen the trading profession only with the sole intention of creating loads of money but because they enjoy trading and have passion for the art of the trading.
The most basic and utilized mantra to be successful in life in any aspect is that there has to be passion for what one is doing and also that one should enjoy his/her work or profession. The profession of trading in the stock market is no different from any other profession and hence this mantra is applicable also to this profession.
The reason that trading has a low success rate (around 10%) is because many people enter this profession with the greed of earning fast and easy money and have a gambling mindset. Once they realize the hard work, dedication and continuous study required, such people get scared of the stress it may cause and easily give up.
WHY DO YOU WANT TO BECOME A TRADER?
Is it for fast money or do you have passion for studying the chart and making analysis of the companies and enjoy trading?
If the answer is the latter one then most likely one will be successful in this profession otherwise one should definitely not risk quitting job or diverting daily routine business and opting for trading as a full-time business.
- Financial Security
Financial security is very important when it comes to trading. Before entering into the uncertain profession of trading, one needs to be prepared with a list of the following items: –
a. Regular monthly expenses starting from monthly household expenses to monthly EMIs etc.
b. Savings you have in your bank account. In addition to Trading Capital, one should have a savings of at least 2 years of monthly expenses. For e.g. If monthly expense is Rs. 25,000/- then one should have at least Rs. 6,00,000/- savings account before entering into full-time trading.
Also, remember to clear of all debts like Home Loan, Car Loan etc before taking trading as a full-timeprofession. One cannotpresume to pay monthly bills from trading profits for the first month itself. Profitable trading will take some time, and hence one needs to have plan B in place, so that one can stay calm and unemotional while trading. For e.g., at least having two years of savings or having a partner who is having a stable job and ready to support you
In any business, one needs to have patience to achieve success and reach the desirable target. Similarly, in the trading profession as well, patience is the key to success. One needs to preserve a lot of patience to wait entire day to take that one good trade. In the trading business, the lesser the merrier. It means that if one is a day trader, it does not mean that one needs to constantly keep trading and has to do 10-15 trades a day. One needs patience on both side of trading; patience to wait for a trade to come to your level and, patience to let your profit run, so that you can maximize your profit.
Many people lose money because of their impatient nature. They may wait for some time but as frustration starts to kick in, one will trade at the wrong place and eventually losemoney. One has to understand that, in the long run, trading less frequently and taking a patient approach will actually make money much faster.
- Trading Discipline
Trading disciple is nothing but having a strict rule and ability to stick to it irrespective of circumstances. The following pointers will help to inculcate trading discipline in one’s life.
- Deciding risk per trade and never deviating from it (for e.g. risk per trade is 2%, that means on will not deviate from it at any cost)
- Respecting stop loss (once the stop loss is set, one should not deviate from it like changing it to the next level or trying to average the losing trade)
- Maintaining a trading journal to record all trades like entry, exit, reason for the trade, RR in that trade etc.
- Trusting one’s own strategy, sticking to it, and not jumping from one strategy to another strategy.
Discipline should be a habit, if one is not a disciplined person in real life then one cannot be disciplined in trading because trading reflects your real behavior. It is a suggestion that one should not merely be a trader but a disciplined trader.
- Trading system
The final checklist required after building the above-mentioned disciplines is that one needs a good system or a software which can give the trading edge. Many such software’s are available in the market.
Trading edge is nothing but a technique which gives one an advantage over other retail traders, it can be anything like pivot point strategy, price action strategy, vwap strategy, or for that matter any strategy which feels right for yourself.
No system in this world can give a 100% success rate. Please do note that trading is a game of probability, any trade can fail at any given point of time, unless one has a robust system which has an edge and can give high probability trades, and which can keep one profitable over the long run provided that if play with proper risk management.
Please do make sure that one ticks all the above boxes before entering into the trade profession. The above-mentioned check list is the basic and primary checklist. If you wish to be mentored properly, stay motivated, be a disciplined trader, use the technical tools properly, then I would definitely suggest you to subscribe because whatsoever it is, if we follow basic rules, V KAN BUILD it together.