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 Golden Rules
Never borrow and invest/trade in Share Market
Before entering trade always calculate risk involved
Maximize Your Profits, Not the Number of Trades.
Make good decisions and winning will take care of itself.
Be Patient Enough to Wait for Good Trades.
Consider your account size for appropriate trading.
Cut Losses Early, Protect Profits with Trailing Stops.
 
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Psychology of Trading
If you gave the perfect system to 100 people, less than 10 would actually make money. This is because most people fail owing to the fact that they cannot stick to the rules; they continually second guess themselves or they simply have an unconscious urge to self destruct! Unless you believe and take these facts seriously, it is unlikely that you will be among the winners. If you have already done some trading, you'll know this to be true (even if you're not prepared to admit it) but if you are a complete beginner then take it from me - when you actually start trading, your emotions will be struggling to rule your head.
Sometimes, it's not so much the fear of losing money because, after all, if we apply sensible money management, we should never stand to lose more than a small percentage of our capital. It can even be a relief when the trade hits our stop and the stress is over at a loss of few Rupees. What is often the driving factor is the fear of failure and the loss of our dream of financial independence as a successful trader.
If you have any kind of experience of life and if you've learnt anything from it, you will have to admit that our emotions usually get the better of our heads. So, we start trading with a known weakness. In addition, to trade successfully, we have to go against our natural reaction, which is to quickly pocket any profit and do nothing about mounting losses, in the hope that the market will do an about turn. Trading is rather like riding one of those trick bicycles where the handlebars are rigged so they turn the bike in the opposite direction! You have to reprogram your natural instincts if you don't want keep crashing.
Much has been written about the fact that fear and greed moves the markets in the short term. Sadly, greed makes us close the trade with less profit and fear makes us hang on to our losses - quite illogical.
In particular, there is an interview with Dr. Van K Tharp, a research psychologist who has investigated what brings success or failure in trading and devised a system for improving the results of traders. He states that in the minds of the great traders; money is not important; it is OK to lose; trading is a game; mental rehearsal is important and that they believe they've won the game before they start !
We must have a clearly defined set of rules and stick to them. The problem is, the market is always throwing up new scenarios and no rules can cover every possibility. Because of this, we have to use some judgment and it becomes all to easy to find a reason to break the rules by closing trades early, by refusing a signal because it looks risky, by hanging on to a losing trade because 'we thought it was going to turn around' and so on.
If you have a long run of failed trades (more than 2 in a row) then it may be better to take a day off and, when you return to only trade at half your normal value. Reduce your fear of losing and you may start winning again. For some people the road to success is a long and painful one.
Never trade when you are stressed or upset in anyway - you will likely mess up! Discipline and mastery of your emotions often means not trading at all. Learn not to become euphoric when you win nor despondent when you lose - stay balanced.
By way of encouragement, I can only stress that the methods here are well proven to work, so follow them religiously. If you have balls of steel, one way to trade is to place your trade on the signal, set your stop loss an your limit (target) and just leave it alone! If you do this, the statistics say you will be a profitable trader.
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