In this video, we will understand about the trading orientation one should have and the psychology to remain consistent, while trading.

In this video, we will understand about the trading orientation one should have and the psychology to remain consistent, while trading. Now, one thing which is commonly spoken about by successful traders is that the path to make money in the stock markets is not achieved by being a great analyst, what matters is the correct approach, being systematic, and most importantly, to be consistent. Even the best of the analysts and calls in the market cannot make money for you if you are not disciplined, unbiased, and you do not have a plan of action.

So, in this video, we will provide you with a few actionable steps which are a must, to be consistent and to be disciplined while you’re trading. First is, trend is your friend. Always believe in “trend is your friend”, till the end, until it bends. That means, always trade with the trend and do not try to be against it. In an uptrend, look out for buying opportunities at lower prices, and in a downtrend, sell at the rises. Do not get carried away and always keep the broader trend in mind while trading. Second thing to be kept in mind, is to always use a stop loss.

No matter how much conviction you have on your trade, you still need to keep a strict, predefined stop loss whenever you trade. Be it an investment trade, or a swing or an intraday position, it has to be done while keeping a defined stop loss. Another thing which is to be kept in mind, to make big money and ride the entire trade, is that we should always focus on averaging our profits through the pyramiding process.

This means, adding more quantity of shares to your winning positions while trailing your stop loss. While doing this, we need to keep one thing in mind, that is, each time we add more shares, the quantity has to be lower than the previous one. So, our trade structures like a pyramid. Next is that, we never risk more than 2% of our trading capital in a single trade, and the risk reward ratio per trade should be a minimum of 1:2, and we need to decide the trading quantity accordingly. For Example, If the total capital is Rs. 10 Lakhs, then the maximum risk per trade must be below Rs. 20,000 (2% of Rs. 10 Lakhs). If the stock is trading at Rs. 500 and the stop loss is Rs. 20 (which is 4% of the Price), then the trader shouldn’t take more than 1000 shares; so that the total money at risk would be below Rs 20,000 (2% of Capital). Now let’s take another example. If the stock is trading at Rs. 500 and the stop loss is Rs. 50 (which is 10% of Price), then the trader shouldn’t take more than 400 shares; so that the total money at risk would be below Rs. 20,000 (2% of Capital).

By doing this, we ensure that even if we go wrong in the markets, we still survive to trade more. So, the idea is to be consistent with our quantities, risks taken, targets, and of course, the strategy. It’s always been seen, that people who have a plan and who execute according to their plans in the markets, have a much higher success ratio than the people who end up taking hasty trading decisions. So, always plan your trades in advance and then trade as per your plan. Do not deviate. Last but not the least, Keep your emotional quotient at a balance.

So, have a fixed strategy, execute it with discipline, and if you go wrong 10 times in a row, please stop, think, and rework on your strategy. Don’t let your ego come in between your trades. The best way to achieve this is by documenting all your trades. Record your entries, exits, stop losses, targets, and most importantly, the thesis or the reason behind taking up the trade. Every individual is different, and so, their trading styles also differ. So, devise a set of rules for yourself, develop a strategy and be consistent.