Are You Vijay Verma from Deewar? A Rulebook for Traders

Because “yeh usool, yeh aadarsh, kis kaam ke hai yeh”? (Are you Googling this famous Bollywood dialogue? Caught ya 😭)

We’ve all enjoyed the Alpha-ness of breaking rules in our school and college days (re-read this differently if you still qualify 😆), but as a trader, you’ve got to stick to the rulebook to carry a successful trade or to minimize losses.

Because unlike what Amitabh Bachchan said in Deewar, ye usool aur adarsh trading mein toh kaafi kaam ke hai :D

So let’s straightaway get to the point.

Here’s a Tiny Rule Book for Traders:

1. Control Your Emotions

Controlling your emotions is the first and foremost rule. Getting too anxious about losses or too excited about profits and taking a wrong trade lets emotions take the driver’s seat.

And why is this important?

• Fear of Missing Out (FOMO): When you see a stock going up fast, you might buy it right away, but if you don’t analyze carefully, you might buy it at the wrong time just before the price drops.

• Revenge Trading: Revenge is a basic human tendency, but revenge trading’s basic tendency is to make you lose more than what you lost. You might want to quickly make the money you lost by taking another trade, but it might be risky as you are not thinking clearly.

• Overconfidence: If you make a good trade, you might think you can’t lose. This can make you take even bigger risks, and you may even lose what you earned before.

2. Don’t Overtrade

Overtrading can harm your trading performance and your financial health. You should avoid it because of:

• High transaction charges
• Increased risks
• Emotional burnout

3. Trust Your Analysis

Getting your own analysis and some homework in place provides a clear roadmap to a successful trade.

4. Respect Stop Loss

Respecting stop loss is vital for healthy trading as it limits your loss and protects your capital for future trades. A big loss can take a long time to recover, so managing risk is key.

5. Always Take Your Gains

If you make a good return during a trade, just accept it. Do not get greedy and risk more of your capital.

6. Plan and Track Your Trade

Planning and tracking your trade gives you clear direction. It helps you manage risk and losses effectively. It also helps you set realistic goals and provides a roadmap for your trade.

Stick to these rules and trading might just feel less like Deewar and more like Sholay! Happy trading!