Know The Top Things To Learn To Be A Successful Stock Market Trader

“The goal of a successful trader is to make the best trades. Money is secondary.” -Alexander Elder.

For the majority of the people, a stock market is a place where they can earn money with ease, but that is not true. It is where you can make money only after doing thorough research, learning the skills, and having analytical skills. Learning and acquiring these skills are the basic difference between a professional stock trader and a losing trader.

So, while we know the best ways to start learning about stock trading, it is equally important to be aware of what you should learn to be a successful stock trader. So, let us explore these top-notch learning aspects in depth here. 

Things To Learn To Be A Successful Stock Market Trader

How to learn stock market trading in India? This is the first question that pops up when it comes to understanding the stock market and starting to trade. So, once you are thorough with the basic information about the stock market, these are the additional things to learn to ensure you have a successful run in the stock market:

1] Analyze Chart Using Tools

The start of the stock trading journey is incomplete without knowing the different tools used to analyze the charts. Experts in the stock market hone (sharpen) their ability to comprehend and analyze all essential data about their trade assets. Analytical skills are valuable because they allow a professional to recognize, understand patterns. It’s vital to establish which technical trading tactics are required when analyzing a market and spotting patterns and trends. To improve your analytical skills, you must focus less on the money to be made and more on taking the appropriate move at the right time.

The indicators are divided into broad 4 categories, including trend, momentum, volatility, and volume. Additionally, a few notable tools used to analyze the charts include:

  • On-Balance Volume Indicator
  • Accumulation/Distribution Line
  • Moving Average Convergence Divergence
  • Moving Averages
  • Average Directional Index
  • Relative Strength Index
  • Bollinger Bands 
  • Aroon Indicator

2] Making Strategy

The success is highly dependent upon the strategy developed by the stock trader. A trading strategy is a method of identifying specific market conditions and price levels through analysis. While fundamental analysis can forecast price fluctuations, most tactics concentrate on technical indications. You’ll need access to charts that reflect the time range you’ll be trading, a curious and objective mind, and a paper pad to scribble down your ideas to develop a strategy. Then you codify your thoughts into a strategy and “visually backtest” it on different graphs. Testing a strategy using several indicators and periods will help you figure out how and when the strategy will perform and the best strategies to make money and minimize losses. A few well-known strategies include:

  • Trend trading
  • Range trading
  • Gap trading
  • Pairs trading
  • Arbitrage

3] Position Trade Size

The amount of units an investor or trader invests in specific security is called position sizing. When selecting the optimal stake size, you should consider account size and risk tolerance. The size of your position isn’t determined at random, nor is it determined by how confident you are that a trade will work out. Rather, the size of a stake is defined by a simple mathematical formula that aids in risk management and maximizing profits on the risk taken. Understanding the right way to position the trade is important to avoid the risk of various varieties.

4] Managing Risk

Risk management analyzes prospective losses from investments made by investors and takes steps to reduce the likelihood of such losses occurring. Risk management is now an important component of many trading techniques. Risk management’s main principles—avoidance, retention, sharing, transferring, and loss prevention and reduction—can be applied to all aspects of one’s trading plan and pay off in the long term. A successful trader understands when to take more risk and take less risk. You must maintain a correct risk-to-reward ratio to get the most out of stock market trading. The best thing to do is to consider certain rules. The main ones include the 1% rule and the 2% rule.

  • The 1% rule restricts their risk to no more than 1% of their total account value on any particular trade for day traders. Traders can risk 1% of their account by taking huge trades with tight stop-losses or tiny positions with stop-losses distant from the entry price.
  • The 2% Rule, which states that you should never risk more than 2% of your account equity, is one prominent strategy. The 2% Rule also gives your trading decisions some structure. You can also establish exit points on profitable trades by using a stop-loss threshold with a specified risk/reward ratio.

5] Manage Capital

The first thing to understand about stock trading is that there is no minimum amount for which you should trade. It depends on your capacity, surplus, and potential. One can start trading with as low as INR 100 to any amount. Managing capital is important so that even if you face a loss, your savings are not exhausted. In other terms, you must invest only that much capital for which you can bear the loss. Keeping a chunk of the amount aside for contingency is equally important. Expert traders adopt a few capital management strategies to make the trade count. Fixed ratio capital investment is one of the finest strategies to be adopted, which allows you to mark a particular amount that you can invest from your savings.

6] Execution of Trade

Another important thing that you should learn while in stock trading is the execution of the trade. It doesn’t mean that you can execute a trade anytime you wish, but again you need to have a proper plan at the right time and the knowledge of the right signal to execute the trade. An investor who uses a brokerage account must first submit a buy or sell order, which is then forwarded to a broker for a trade to be executed. The broker then chooses which market to send the order to on behalf of the investor. Once the order has been placed in the market and filled, it can be declared completed. Marking a stop loss is important while you plan to execute the trade. This will limit the losses when the trade goes in the other direction.

7] Stock Market Psychology

Most traders in the market ignore market sentiments. For many, the market movements are not influenced by the emotions and sentiments of the investors, but this is not true. The ability to recognize and regulate emotions and behaviors when trading is referred to as stock market psychology. Fear, greed, and the fear of missing out, influence illogical financial decisions on a human level (FOMO in trading). However, huge market fluctuations can be caused by crowd psychology, which can activate emotions and lead to fear-based trading. A trader should embrace the positive psychological variables while seeking to moderate the negative ones to benefit from stock market psychology. The main factors to keep in mind include:

  • Investor mood
  • Market sentiment
  • Emotions such as fear or greed

8] Market Sentiments

The entire sentiment of investors toward a securities or financial market is referred to as market sentiment. It’s a market’s mood or tone, or crowd psychology, as reflected by the activity and price movement of the securities traded there. Rising prices suggest a bullish market, whereas dropping prices signal a bearish market. Some investors make money by identifying overvalued or undervalued stocks about market sentiment. They employ a variety of indicators to discover the best stocks to trade by gauging market sentiment. The common indicators include:

  • CBOE Volatility Index (VIX)
  • High-Low Index
  • Bullish Percent Index (BPI) a
  • Moving averages.

9] Researching Diligently

Professionals in the stock market must have a healthy thirst for knowledge and a drive to learn everything they can about the stocks and sectors they trade. Many experts keep track of economic releases, political events, and other developments that could impact the stock market. Identify the market’s most powerful segments and stocks, and use them to your advantage. Research allows you to make more informed judgments and prevent costly errors as a trader.

10] Proper Record-Keeping And Learning

Keeping a trading journal is a good practice that distinguishes great pros. One of the quickest and easiest ways to determine what one is doing properly and is doing poorly is to keep a trading notebook and read it regularly. A great trader has a natural ability to learn, which allows him or her to persevere in adversity. Learning is an essential component of development. When you learn from your failures and the mistakes of others and your environment, you are more likely to be prepared for the difficult times ahead. This promotes resilience, which is crucial for a successful trader.

So, here is a handy checklist of all these points for you. Secure it to make profitable trades in future.

Checklist to become successful stock market trader


If you know how to trade, the stock market can be a lucrative source of income. Professionals can increase their analytical skills, research abilities, loss managing abilities, and record-keeping abilities by having little patience and discipline. The market will reward those who work hard. It’s not simple to become a master, but it’s doable and worth the effort. As said, there is nothing too late to do. So, if you want to excel in the stock trading market, start learning all these today and put them into practice at the earliest. So, get ready today to start moving ahead on making your financial dreams come true.

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