🤔 How I take a trade !!
Before entering any trade, it is critical to establish some set of rules that you must adhere to while in that trade. Depending on their trading style, these rules may differ from person to person. I'll definitely share the rules I follow in this post, but you can design yours as per your trading style.
💡 I follow three simple steps while taking a trade:
1. Know the Market trend:
Before planning any trade or selecting any stock, it is critical to analyze the market's current trend because it will provide us with a clear picture of the market's direction.
2. Screen the screener:
Before entering any trade, it is critical to identify the stocks that would be ideal for the trade, based on the stock's volume, movement, support and resistance, because it is critical to select the right stock for your trade. This not only increases your chances of success but also saves you time, money and effort.
For example:
If a stock breaks out of its resistance, we can take a long position in it because it is more likely to give us quick returns than a stock that is trading in a range.
For finding out the best stocks to trade, there are ample stock screeners available out there. I'll list the ones which I use:
i. MoneyControl(Active By Volume, Top Gainers, Top Losers, etc.)
ii. Tickertape
iii. Screener. in
iv. Investing.com
v. MoneyWorks4Me
There are numerous stock screeners available. You can use any of them as per your comfort.
3. Plan your trade:
After analyzing the market trend and deciding on the stock to trade.
It's time to devise a strategy for your trade. You need to figure out some things:
â—¾Timeframe of your trade:
It is critical that you determine how much time you can devote to the trade. If you can look at the trade frequently, you can trade a smaller time frame (Intraday), or if you can't give enough time to your trade, then you can take positional trades, which do not require much time commitment on your part.
â—¾How much you can put on the trade(Position Sizing):
Deciding the position size is also crucial as any wrong sizing can wipe off your whole capital.
â—¾Analyze risk-to-reward(RR) ratio:
The most important thing is to analyze how much you're getting for taking a particular risk. For example, if you're getting a return of Rs 100 for taking the risk of Rs 150, then it's not a good RR ratio. Generally, a RR of 1(risk):2(return) is considered good.
â—¾Planning your Exit:
After you've decided on all of this, you must plan your exit. This will allow you to reduce your risks while also saving you time.
â—¾Plan the Entry:
It's now time to decide how much you want to pay for a particular stock.
Analyzing various time frames will give you the knowledge you need to plan your entry.
4. Trade the plan:
We've analysed the trend, chosen the stock, and planned our trade. Now, it's critical that we trade what we've planned. I meant by trade the plan that we had to do everything according to our plan. Because most traders plan the entire trade but do not stick to that plan when taking the actual trade. And this will result in massive losses and a loss of trading capital.
🌟 Discipline is the key factor that determines whether you will be successful or unsuccessful in trading.
