In this post, you will get to know certain things that you need to definitely practice, while you are trading. Following are few golden rules that you must practice.
- Carry out Systematic Analysis
Usually, a person who feels negative about the market is called a bear and their positive counterpart is called a bull. There is constant battle between the bulls and the bears during the market hours and it can be seen in the constantly changing price of securities. Rumors, speculations, and hopes drive these short-term movements. However, all the investors are suggested to keep control over their emotions. You must control your emotions and also find logic and a systematic analysis of the company’s assets, management, and prospects.
- Control Emotions
You will notice that tension and insecurity is caused when the stock prices moves contrary to our expectations. Suddenly you ask yourself, whether you should sell your position and avoid a loss? Or whether you should keep the stock in the hope that the price will rebound? Or whether you should buy more stocks of same company? You are not satisfied even when the stock price has performed as per your expectation. At that moment you ask yourself, that whether you should take a profit now before the price falls? Or whether you should keep your position since the price is likely to go higher?
- Hold good reason to buy a stock
Such thoughts that are mentioned above will flood your mind. It is especially when you constantly watch the price of a security. As we know that the emotions are the primary driver of your action, so they will probably be wrong. It is recommended that when you buy a stock, you should have a good reason for doing so. You should have an expectation of what the price will do if the reason is valid.