Odds, Low risk high reward
The best traders will only trade when there is a low risk-high reward scenario. They want to have the odds skewed in their favor as far as possible. The best traders will not try to hit sixes with every trade.
Only trade what you can afford, don’t risk money you can’t afford to lose. Trade defensively, rather than think of what you can make, every time you make a trade you should be thinking about the worst case scenario. What could you lose and how you are going to handle the position if things go badly?
Trading Psychology & rules for stock trader
Also Read : 10 Common Mistakes made by Traders
Patience and discipline
Focus on the bigger picture and be willing to wait and have the patience to only trade when the right opportunity presents itself. Some of the best traders often talk about sitting idle and just watching the markets, waiting for the perfect time to make a trade. Amateur investors find it very hard to not trade and are captivated by all the red and green numbers on their screen and feel like they are missing out on the action. Can you think of times in your trading when you have experienced this? Are you able to sit on the sidelines and just watch the market without jumping in?
Emotions, handling ego
Control your emotions not just when times are bad, but probably even more importantly when times are good. Some of your biggest losses come when your confidence is high. The best traders can keep their ego out of the equation and are able to stay grounded even in the midst of tremendous winning streaks. Also, when one of their trades turns out to be a loser, they are able to admit they were wrong and close out the trade. Great traders never get attached to a trade or a particular stock. A bad trade could be ok, but sticking to your pre-defined trading rules is crucial. Always stick to your trading rules and keep your emotions out of it.
Have A Plan
Before opening an Online Share Trading Account, everyone should have a trading plan. This shouldn’t just be something in your head either; you need to write it down! By writing it down, it is clearly defined and you can refer back to it any time.
Above rules are MUST to become good at trading and not a matter of choice. You might get away in the short run breaking the rules but it’s almost impossible to generate consistent profits if you violate them.