Stock traders monitor share prices on their computers during intra-day trade at a brokerage house in Mumbai
Stock traders monitor share prices on their computers during intra-day trade at a brokerage house in Mumbai

The Indian stock market has enjoyed steady growth in terms of the number of opportunities available to investors and if you want to get a piece of the action there are a number of basics that would be good to know.

Obviously, you will need to have access to a trading account so that you can execute your chosen trades, and having an online trading account will ensure that you will be able to take advantage of situations as quickly and seamlessly as possible.

Here are some things to know.

Discipline is key

It is easy for emotions to get the better of you when you are trading stocks but you need to have a trading system that works for you and resolve that you will not deviate from that strategy unless it is for a very good reason.

Limit your losses

One of the fundamentals of successful investing is the need to have a stop-loss system in place.

Holding on to a stock for too long can be painful if the losses deepen and it is far better to accept when something has gone against you to take a smaller hit and move on. The same applies to taking profits, and when your stock hits a target price, locking in a profit is no bad thing.

Develop your knowledge

Trading stocks can be a steep learning curve and it pays to develop your education as you go along.

Learn to study charts and technical details as it will help you to spot opportunities.

Diversity

Betting all your money on black is a risky strategy and it is wiser to try and create a diversified portfolio across a variety of sectors so that you can spread your risk.

Adequate funding

You should only invest what you can afford to lose. Set aside trading funds that you are comfortable with losing in the worst-case scenario, as this will ensure you remove an element of emotion from your trading decisions.

Time is on your side

It is worth remembering that it often pays to start small and build up your portfolio over time, with many successful investors often taking a medium to long-term view.

Be wary of penny stocks

When you first start investing it can be tempting to look for cheap stocks but low prices can also mean bigger risk and illiquidity.

Many so-called penny stocks don’t make the grade and getting out of them is not always easy.

Realistic expectations

Aim to be realistic about profits and try to limit your exposure to each stock by limiting it to a percentage of your total portfolio.

Have a plan

Successful traders have a clear plan and execute their trades according to their defined strategy, which is a tip worth heeding.

Stay informed

Market sentiment is a highly influential factor in terms of how your stocks perform and that is why knowledge is power.

You should aim to keep informed of current events and announcements so that you can adjust your portfolio accordingly.

If you can follow these essential tips it should increase your odds of enjoying a successful experience as a stock trader.

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