Q. What is your advice to newbie traders who are planning to become professional traders? Sarika Kumar
A. To transition from a newbie trader to a professional one, the following points may be of help.
- Don’t fall in love with your stock. Book profits at the appropriate time regularly.
- Excess of fear and greed both are harmful for the stock trading, so maintain the right balance between both. In absence of fear you may take high risk and lose your wealth whereas in absence of greed you can’t get adequate return on investment. Therefore, maintain the right balance as you trade stocks
- Don’t trade on the basis of information openly available in the market: for example, rumours on TV. Use information from genuine sources such as announcements by the company through stock exchanges, SEBI, etc.
- Don’t trade more than what your pocket allows.
- Don’t leverage more than what you can handle while trading.
- Don’t take high interest loans to trade on the stock market. Try to use your own money.
- Never rely on tele callers offering tips on stock market.
- Patience can be highly rewarding in stock trading but it should be backed by proper research and analysis.
While trading in stocks, you should inculcate the habit of reading financial news and stay updated at all times. Also keep track of the latest trading skills and technologies, such as the use of Artificial Intelligence in stock analysis. Lastly, be prepared with a plan to avoid losses if a trade goes wrong. This will help you recover quickly.
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