Let us see how these can make a beginner to be a success in stock trading.
As a trader it is very important to use our fund wisely & perfectly. According to my view, trading in an index or stock options help us to use our fund in a good manner. Most of the beginners used their funds without any technical skill. This makes them losers instead of earners. Their capital will get vanished. So, they could be scared of even with the word 'Share Trading'.
Here, what we could do is to divide our fund into four portions. Out of these four, keep one aside. Now we have to use the other 3 funds. With these 3 portions, we could do three seperate trading. That is ,each portion for each trade. The broker should be included in each fund. And if the market is going against our trade decision for a short period use 1/3rd money of the fourth leg to accumulate again the same option strike. In this way we can use our capital for 3 trades. This method could be followed only for options trading. In the next topic, I will discuss about how we can make money with these three trades from my own experience.
How to use technical indicators to find the trend?
I use simple moving averages to find a trend.
10- Days simple moving average is enough for me to trade in options to double my money in a year. How it works for me is that, when 10- days SMA goes above current price i will buy put strike of that index or stock & if 10- days SMA go below on going price i will buy call options. If the market is going against our trade buy same option with the fund, we kept separate for this purpose. For derivatives including the option trade time frame is important because of expiry. Use your common sense with this expiry problem to decide at what price can do book profit. Mostly try to book 100% profit. Mostly it has done. However, you should watch market sentiments too before taking a decision. If you are sensible, then you can easily earn money through this method without complicating by using different technical methods together. Start with small fund & try if you want. Even so, with this money dividing method & simple moving average method ,your mental approach to your trade is the important factor that makes you a successful trader.
Finally, our mental feelings in trading.
Fear, greed, pray to be avoided when trading.
As a trader fear keeps us away from trade when we have a good chance of doubling our money. Another problem is after we initiated a trade the price may go against our trade. It's quite natural. Nevertheless, our fear forces us to come out of trade in the money to a lesser degree than our fund. So if we had a decision, stay strong; keep the fear away; Win trade; Be happy.
Greed works straight opposite of fear.Without a chance entering a trade.Making loss.In a trade we are in a good unrealized profit. However, without booking profit & make it a loss trade. So keep greed away.
Praying is not a good solution in trading. After we initiate a trade due to fundamental reasons, and of another matters' price can fluctuate to either side. And we start to pray our God to give the best result. This will change our sensible decision making to gambling. So pray before trading hours.
Take care of your money. Try to find the best trades. Initiate it in good time and book profit at an appropriate time. Be happy.