How do I become a Profitable Trader?

Here are the 10 rules to follow to become a profitable and successful stock trader;

1/ Trading PF ≠ Investing PF: Your trading stock is completely different from your core investment portfolio. With portfolio stocks, we add more as they fall. But, with trading stocks, we sell them as soon as the stoploss is hit. No exception!

2/ No Overtrading: At any point in time, you, as a trader, cannot follow more than 20 open positions. So, don't overtrade! For a working professional, even a 10-stock trading portfolio is sufficient.

3/ The 5% Rule: Per trade, your capital invested must be 5% to 10% of the entire trading capital. And the capital at stake (if a stoploss is hit) must be 5% of the traded capital. No more! Eg: Total Trading Capital: Rs. 1,00,000; Per trade, Rs. 5,000 to Rs. 10,000; Stop Loss (Maximum) 5%: Rs. 250 to Rs. 500. The rule is short losses and big gains for longer-term net success.

4/ Opportunity: The intention is to make a profit, so we trade when the opportunity arises. So, until we are absolutely sure about the said opportunity, we sit idle on cash or invest it in our core portfolio. Mainly during the bearish market or even during the sideways market. We tend to not trade.

5/ Expect Loss: Nobody can be 100% certain of what the stock does the following day. So, be ready and expect losses. Be sure that you are financially and mentally prepared to see around 30%–50% of your trades close in loss or close to cost.

6/ Be Serious: Trading is a serious business in itself. You cannot be a part-time trader and a successful one at the same time if you are not able to dedicate at least 2 hours a day to your trades.

7/ No Tips & Suggestions: Do not take tips and suggestions. Consider that all the trading suggestions given are for educational purposes only. Observe and learn from them. Learn today to earn tomorrow.

8/ Mindset: Here, Emotional Quotient (EQ) matters a lot. So, It's all about your mindset. The more linear you are, the more unnecessary risk you take, thus leading to losses. So, build a trading strategy (the one that works well for you) and try to update it as you trade. Be open-minded and accept the fact that the market knows something that you don't.

9/ Be Curious: In trading, your curiosity will take you places you wouldn't have been before. If a stock is going up or down, be curious enough to dig deeper. Know what's going on with the market. And, for research, use the following sites: (1) https://www.nseindia.com/companies-listing/corporate-filings-announcements

(2) https://www.bseindia.com/corporates.html

(3) https://www.moneycontrol.com/stocksmarketsindia/

(4) https://trendlyne.com/markets-today/

(5) MrPai's Whatsapp Channel (Yup, that's my Whatsapp channel.)

10/ Always remember: Long-term Investing > Positional Trading > Swing Trading > Intraday Trading > Scapling > Anything to do with the F&O. Yes, F&O is not for you if you are here reading the post "How to Become a Successful Trader."

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