Golden Rules for Trading and Investing
Follow your rules.
Don’t forget rule number 1.
Always trades with a stop loss, define it before you enter a trade.
Always decide your profit booking method in advance, greed may come in between.
Do not count on your money when the trade is open.
Do not overtrade; trading a position which is bigger than your portfolio size in excitement can be a big risk.
Choose to stay in market only when required, choosing a strategy that keeps you in market only 50-60% of times helps you avoid price shocks.
Cutting a big amount of risk with a nominal cut in profitability is a good tradeoff.
Trade a position which has reward: risk ratio at least 1 :1 or greater.
Do not trade illiquid stocks, which cannot fulfill your order when required (low volume stocks)
Do not over leverage your positions; with extra reward it brings extra risk.
Set your daily, weekly, monthly, yearly targets and so on for risk as well as reward.
Do not trade on a day with holiday type volumes.
Make your trading boring; if it is interesting there is some flaw.
Trading is a Business! Plan well in advance all the requirements and rules before your execute.
Maintain a trading journal, paper trade after a loss.