The Beginner’s Guide to Stock Market: Top 13 rules to become successful in share market

rules to become successful in share market

Are you new to the world of share market trading and feeling confused by all the technical words and complex strategies? Don’t worry: In this beginner-friendly guide, we’ll simplify the Top 13 rules to become successful in share market which will help you understand the basics and set you on the path to success.

Top 13 Rules To Become Successful In Share Market

1. Understanding the Basics

If a person doesn’t read books or watch videos to learn about shares buying, selling, or analysis, they should not participate in the stock market. Because if you don’t understand buying and selling, you need to learn technical and fundamental analysis. Identify your capabilities.

If you’re considering entering the share market, it’s crucial to educate yourself. This means reading books, watching videos, or taking courses on shares trading and investment. Without a solid understanding of how buying, selling, and analysis work, it’s risky to participate. Learning technical analysis (studying charts and patterns) and fundamental analysis (evaluating a company’s financial health) is essential. Recognize your strengths and weaknesses in these areas before you start.

2. Newcomers Should Be Cautious

Newcomers should avoid options or futures trading for at least 3 to 4 years.

For beginners, it’s advisable to avoid options or futures trading for at least the first 3 to 4 years. These types of trading involve complex strategies and higher risks. Starting with more straightforward stock trading allows you to build a strong foundation before delving into these advanced methods.

3. Adaptability and Quick Decision-Making

To become successful in the share market needs to have the ability to find opportunities in any situation and make quick decisions.

Success in the share market depends on your ability to adapt to various market conditions and make swift decisions. The Indian share market are dynamic, and opportunities can arise or vanish rapidly. Being able to spot these opportunities and make well-informed decisions is a key factor in achieving success.

4. It’s Not a Game of Luck

Anyone who sees the share market as a game of luck or gambling is unlikely to succeed, actually share market is a business. Just like any business takes three to four years to stabilize and requires effort, the stock market becomes profitable after a few years of dedicated learning and effort.

Viewing the share market as a game of luck or gambling is a surefire way to lose money. It’s essential to understand that the share market is a business venture. Just like any business, it takes time to stabilize and become profitable. Dedication, effort, and learning are necessary for success.

top 13 rules to become successful in share market
top 13 rules to become successful in share market

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5. The Paper Trading Strategy

If you plan to trade based on any strategy or advice, start with paper trading for the first 20 trading days. You should aim for at least 17 profitable days out of those 20. If not, reconsider your approach.

Before committing real money, consider paper trading. This means simulating trades on paper without risking actual capital. Start by making at least 17 profitable trades out of your first 20 paper trades. If you can’t achieve this level of consistency, it may be a sign that you need to refine your trading strategy.

6. Start Small, Grow Steadily

Begin with a small number of shares when you find a strategy that works. If you make a full-week profit, increase your holdings by 25% every Monday.

When you find a strategy that works, begin with a small number of shares. As you gain confidence and experience, you can gradually increase your holdings. A common practice is to add 25% more shares to your portfolio every Monday if you’ve had a profitable week.

7. Avoid Overtrading

Only trade when you have a perfect chance. Limit yourself to two to three trades at most in a single day. Avoid overtrading. Only trade when you have a strong conviction about a trade’s potential success. Limit the number of trades you make in a single day to two or three. Overtrading, or making too many trades, can lead to impulsive decisions and losses.

8. No Emotional Trading

Once your target or stop-loss is hit, exit immediately. Don’t engage in averaging down or hedging after a stop-loss. Avoid emotional trading because trading operates on logic, not emotions.

Once you set a target price for a shares or establish a stop-loss level to limit potential losses, stick to it. Avoid the temptation to average down (buy more of a falling shares) or hedge (use other investments to offset potential losses) after a stop-loss is triggered. Emotional trading should be avoided because it often leads to irrational decisions.

9. Avoid Chasing Losses

Do not trade to recover past losses. Doing so may lead to more losses. Avoid trading when you’re overly confident or stressed. This can lead to mistakes and losses.

Don’t make the mistake of trading to recover previous losses. This can result in more losses. Avoid trading when you’re overconfident or stressed, as emotional states can lead to costly mistakes.

10. Share Market Trading as Supplementary Income

Don’t make share market trading a full-time job. Even if you make good profits, don’t quit your regular job entirely. Successful traders or investors often have other sources of income, such as brokerage firms, advisory firms, or consulting firms.

Consider stock market trading as a supplementary source of income, not a full-time job. Even if you’re making consistent profits, don’t quit your regular job entirely. Many successful traders or investors have multiple income streams.

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11. Buy and Sell Wisely

There’s no such thing as short-term, medium-term, or long-term. All these terms are just to understand your mindset. Buy shares at the right time and sell them at the right time, without holding onto them unnecessarily.

The distinction between short-term, medium-term, and long-term investments is less important than making well-timed decisions. Buy shares when they are undervalued and sell when they reach their fair value or become overvalued. Don’t hold onto stocks unnecessarily.

12. Trading and Investing

Those who only do intraday trading or only invest never really succeed. Success comes to those who do both at the right times.

Success often comes to those who are willing to both trade intraday (within a single trading day) and invest for the long term when market conditions are favorable. Adapting to different market scenarios is crucial.

13. Diversify Your Investments

Never put all your eggs in one basket. According to this rule, divide your total investment amount into ten different shares.

Spread your investments across multiple shares rather than concentrating them in one. This diversification helps mitigate risk by reducing the impact of poor performance in any single share.

These are some essential rules for anyone interested in the share market. Remember, successful traders strategies requires knowledge, discipline, and the ability to adapt to different market conditions.

These golden rules for trading provide a comprehensive guideline for navigating the share market successfully. Remember that the share market can be highly rewarding, but it requires diligence, knowledge, and discipline to prosper.

So start following these Top 13 rules to become successful in share market and try to align these rules with your traders strategies.

You can also read this books for further knowledge gain – Trading habits

Please read this article – What is a Share Price Target?

How can I start educating myself about the stock market?

Begin by reading books, watching videos, or taking online courses on stock trading and investment. The above article on top 13 rules to become successful in share market will also help you to take starting your education journey

Can I start trading stocks without any prior knowledge?

It’s not advisable. Understanding the basics is crucial to minimize risks.

How do I know when it’s the right time to buy or sell a stock?

Timing depends on market conditions, so continuous learning and analysis are essential.

Is it possible to make a living solely from stock market trading?

While it’s possible, it’s recommended to have other income sources for stability.

What’s the biggest mistake beginners make in the stock market?

One common mistake is overtrading and making emotional decisions; it’s essential to stay disciplined and follow a plan.

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