Stock trading is very lucrative, especially if you do it for a long period of time. To be successful, you must know a company’s financial health and true value.

Trading is a very old practice. It began with bartering, where people exchanged goods directly. This ancient form of trading laid down the foundations for the modern stock exchange.

Stock exchanges are places where people can buy and sell company shares, which are part of the company. Amsterdam was the first modern stock market, where shares of the Dutch East India Company were traded.

In 1607, a single firm traded derivatives or contracts based on an asset’s value. A few years later, dividends were paid to stockholders. Amsterdam was the birthplace of both futures and option trading.

Even those with little experience are becoming more interested in the stock exchange. Many see trading as a way to increase their wealth.

Trading consistently in the green is a goal for every trader. However, the journey to get there is not always easy. By following some tried and tested strategies, you will increase your chances of staying in the black. These ten trading strategies are simple and have been tested to ensure you remain in the black.

1. Make sure you have clear goals and stick to your plan

A clear plan and goal are the foundations of successful trading. Know what you want before you make your first trade.

• Define trading goals: Do you want to achieve short-term gains or long-term growth?
• Make a plan. Outline where you will enter and exit the market, how much risk you are willing to take, and what you will do if there is a change in the market.
• Stay disciplined: Emotions can easily influence you, but staying steadfast is the key to long-term success.

2. Use Stop-Loss Orders

Stop-loss orders are a way to prevent further losses by selling your stock automatically if the price drops below a specific level.

• Set a stop-loss. Decide the maximum loss that you are willing to accept on a particular trade, and then set your stop-loss accordingly.
• Protecting your capital: Stop-loss orders can help you prevent a small loss from turning into a large one.

3. Diversify Your Portfolio

Diversification is the act of spreading your investment across different assets and sectors in order to reduce risks.

• Don’t put all your eggs into one basket. Diversify your investments by investing in different sectors, such as technology, healthcare and consumer goods. If one sector does poorly, other sectors may do well. This will balance your overall return.
• Add different asset types to your portfolio: For added stability, consider adding bonds, ETFs or mutual funds.

4. Keep up with the latest market trends

Trend trading is an approach where you base your decisions on the direction the market will take.

• Determine the trend: Use tools of technical analysis, such as moving averages, to determine if the market is trending upward, downward, or in a sideways direction.
• Trade the trend: If you are buying, then focus on the upward movement of the market (going long). You might want to sell (go short) if it is going down.

5. Practice Risk Management

Risk management is the process of controlling how much money you are willing to lose on a given trade.

• Use 1% Rule: Do not risk more than 1% on any single trade. Even if the trade does not go according to plan, your portfolio will still be relatively unaffected.
• Always balance risk and reward. Aim for a greater potential reward than the risk. If you risk Rs 10,000 to earn Rs 30,000, even if you occasionally lose, you will still be ahead.

6. Stay in Control of Your Emotions

Fear and greed can lead to bad trading decisions.

• Stay calm: Don’t let short-term market fluctuations affect your trading decisions. Avoid impulsive trading and stick to your plan.
• Avoid trading with emotion: It is best to avoid trading when you are feeling overly emotional or stressed.

7. Regularly review and adjust your strategy

The markets are always changing. It is important to review your trading strategies regularly.

• Analyze previous trades: Take a look at what worked and what did not. You can learn from your past mistakes and successes.
• Adjusting your strategy: When market conditions change, or if you notice patterns in your trading performances, do not hesitate to adjust your plan so that it better aligns with your goals.

8. Learn how to identify and trade support and resistance levels

Technical analysis is a key concept that helps you make better decisions.

• Support Level: The price level at which a stock is likely to find stability as it falls. Consider it a price floor below which the stock has difficulty falling.
• Level of resistance: The price at which a stock is often under selling pressure as it increases. It acts like a ceiling.
• Trade near the following levels: Buy near support and sell near resistance to maximize profits.

9. Use of Technical Indicators

Technical indicators such as moving averages (MACD), Relative Strength Indexes (RSI), and MACD provide insight into market trends, entry and exit points, and possible entry and exit strategies.

• Moving averages: These smooth out price data in order to create a trend following the indicator.
• RSI Helps determine whether a stock has been overbought or oversold. This can indicate the possibility of a reversal.
• MACD This indicator shows the relationship between two moving averagings and can be used to signal potential buying or selling opportunities.

10. Keep informed and adapt to market conditions

Financial markets are affected by various factors, including geopolitical developments, economic data, and market sentiment. By staying informed, you can anticipate changes.

• Stay up to date with the latest market news. Get the latest earnings reports and economic data releases.
• Be adaptable: Markets can change quickly. Be prepared to adapt your strategy and portfolio to new market conditions.

Conclusion

Trading to make money requires knowledge, discipline and the right strategies. You can increase your odds of consistently profitable trading by setting clear goals, managing risks, following trends and staying up to date. No strategy can guarantee success. However, these ten methods have been proven to improve your trading results.