The 4 Vedas to Managing Risk

Have you ever had a tough day trading? Do you look at your P&L at the end of the day, and wonder how you’ll get over such predicaments? Well, then that’s not just you, traders face such problems every other day in the Indian Stock Market. Without any given rules or courses of action to take to, we tend to get upswept by the dynamicity of the Stock Market Live. Here we present to you our four Vedas/Rules that have helped us and our students manage their risks.

Rule 1: Decide in advance the maximum loss for the day…

“Planning without action is futile…

Action without planning is fatal”

Trade with optimism in Stock Market, however, decide in advance the amount of loss that you will incur in any given day. This rule curtails any superfluous losses incurred in a day, once you reach a given limit of losses. Also, it’s necessary to establish such an amount before the market begins and no access to change it later. In fact, it is advisable to let someone else set this lock so that you can not trade after you’ve reached the limit even if you want to.

Rule 2: Put a limit to your position size…

“ Trade, but to satisfy your need.

Not your greed”

Keep in check the number of shares you purchase for a given trade in the Stock Market Today. Gut feeling is treacherous when it comes to trading; never increase your risk beyond your limits. Most of the time, it is our intuitions that lead us to losses. And that too, with a huge size..it can really be ruinous. Listen to your intuitions, but never forget your limits. Stay updated with stock market news and world stock market to have the required exposure.

Rule 3: Restrict the number of your positions

“ Even the best of traders know their limits…”

We should always limit our focus on selected Stocks and not override the stock market basics. It is really difficult to keep a check on and study a humongous amount of shares at a time. Hence, we should limit the number of our positions to a minimum in stock market timings so that our primary focus is on personal growth.

Rule 4: Reduce your loss count

“It is O.K. to take a break today,

If you’re ready to come back stronger tomorrow”

What’s more important than our financial capital is our ability of judgement and our psychological capital. Rational decision making is necessary so that we do not put ourselves in stress. When we face losses incessantly in the equity market, we tend to lose our confidence and feel stressed. Not “every” day is “your” day; so if you’re facing losses continually, it is ok to take a day off and come back stronger than ever tomorrow.

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Author

Shivam Aggarwal

ISM-Institute OF Delhi

It’s Out Now! Why people lose money in the stock market?

WHY PEOPLE LOSE MONEY IN THE STOCK MARKET?

I see this question among many novice traders, as a matter of fact, this has been the perception from the start.
Why people lose money in the stock market?
The stock market has been around us from decades and also been playing a vital role in day to day lifestyle.
Although we do not realise this and hardly given any second look to the Nifty Charts or Sensex Figures. We are too busy attending our daily chores and obsessed with jobs 9-5, without realising there is a whole second world exists apart from our own known small world.
Well, To know, the answer to this Second Biggest Question, we need to know what is the stock market?
If you are wondering which is the first BIG question; “How to make money in the stock market?” is the first for your knowledge.
Let’s make this easy and understand the answer in simple points.

Are we investing money more than we can manage?

How do we decide how much money should we invest in the stock market? Best to my knowledge, people put money in the stock market usually they have left after spending. There are some who are into investing and trading in the stock market but not the majority I say. This is one thing we should plan on; How much money you want to spare for Investing or Trading in the stock market. If you ask me? I say for investing, you should really invest before savings and Spending. Here I am not suggesting you to cutting out on Daily expenses.
For Trading, You put money in a trading account (Demat account) which you can manage easily. Risk management is very important when it comes to securing capital in trading stocks especially Intra-day.

Do we really know anything about stocks we are investing in?

Social media platforms like Facebook, Twitter, Instagram, youtube are full of knowledge but can be misleading too. Some people are really just trading or investing based on other’s views and analysis. For instance, A doctor who operates on a live body and makes his first big cheque after 8-10 years of Learning, Hard work and practice. An engineer goes to the best university for admission to learn and practice. Likewise, Trading in the stock market is a profession and also needs learning and practice. Having a mentor can help you save time from making mistakes and learning from it. At ISM, Each mentor carries at least 10 years of trading and training experience. With the expertise and a strong support from the investors and management, ISM Delivers future leaders to the stock market industry.

Stock Market is a GAMBLE?

Confusing Speculation with investing is a myth. Investing means making a good decision and sticking with it for good. Acting on tips and call or wildly picking stocks for your portfolio is not investing. Studying a company, research on the  business plans before investing without a time horizon is doing it the right way.Whether you are investing to fund your College education, Buying a property you should not forget return comes with risk. It is always recommended to go though the risk and policies specially investments with attractive returns. If one cannot stand with the trends of stock market then he/she should avoid stocks. One of the best way to make your investment with less risks is to avoid investing in startup companies and highly volatile stocks.

As warren buffet said,

“Don’t put all your eggs in one basket” or “Don’t test the depth of the river with both your feet while taking risk”?

Diversification or Investing Low-cost could be one thing that can save an investor or beginner in stock market from getting over exposed or burned. If you are interested in trading then Paying more brokerage fees to brokers in one thing you should give second look to. There are many traders who are now in to Investment but they have got the capital to invest in Long terms investment from Day- Trading.

Everyone as access to the same resources and information. Taking stock market for granted one of the big mistakes you will ever do. Researching before investing and Analysing before trading will reveal good returns on your investment and trading portfolio.

So, Do You think you are ready for Investing or do you want to start making money in stock market as Full Time stock trader.

Check out Courses which comes with Funds for trading and 100% Job Guarantee.

Don’t forget to check our the best stock market course https://www.ismdelhi.in/stock-market-courses-star-trader-course/ and Internship program https://www.ismdelhi.in/internship-programme/

How to improve Trading Psychology ( Tips for Stock Market Beginners and Professionals)

Psychology Of Trading in stock market

Psychology of trading is nothing but the brain game that power the trader to trade profitably. Many advices are there on how to trade keeping your emotions (market emotions as well as traders emotions) under control and what are the best ways to stay out of a trap.

Importance of trading psychology/ emotions?

Hope is one of the most important human emotions. But when it is intertwined with greed, fear and regret, it stops profits. To ignore this one element of psychology can turn, many times, profit into losses. The stock market is all about money. There is information on graphs, trends, strategies, technical and fundamental analysis. Still a very important aspect of human nature, his psychology plays a very important role in rewarding or punishing in money making.

Following emotions need to be controlled while trading in the stock market:

1: Controlling small losses (emotion involved regret)

When we make blunders by making big losses, then we regret.  We are filled with the feeling of sadness and disappointment for a loss done.

When you know you are making losses, control then and there. One of the lessons we have to learn here is to evaluate what went wrong and move forward.  Small losses can are be controlling line and it reduces the anxiety of regret along with the anxiety of losing fortunes.

Have a loss limit plan

2: Reducing Risk (fight Fear)

Fear is a good emotion if it takes you out of a falling trade. However, fear can work unfavourably when the trader becomes fearful in entering the trade because of the previous loss. People have known to commit suicide out of fear during market panics. But no one has ever thought of committing suicide because of greed. If fear is showing up in your trading, reduce your risk. The smaller the potential loss, the less scared you are of the trade.

When there is fear, steer clear! When in doubt, get out!

3: Excessive desire for Profit Taking (emotion involved Greed)

Greed is an antonym of fear. It means desire from a trade or stock to provide immediate and superficial returns. When greed is hovering over a trader, his only focus is on how much money he can make while staying in a trade. But he does not realize that profit cannot be claimed until a position is closed. Till then the trader has a paper profit. At this time don’t forget the practices offered by SEBI to put ‘stop losses’ in the trade. The discipline of understanding the technicals are vital and equally important to control greed factor.

Don’t marry your positions

The other greed that harms a trader trades, when he starts by increasing position size. The trader thinks of doubling the position in anticipation that he can double the profit. But along with profit his future prospect of loss also multiplies. The best way to conquer the emotion of greed is to religiously follow risk rules. If your wallet allows you to take the maximum risk of rs. 10,000, then never take a position size that increases that risk. This is the only way to safeguard your wallet.

Winning traders play defence before offence.

 

The Bottom Line :

 

Controlling your emotions does not give you the edge over trading. It simply teaches you to master your emotions for long-term trading success. With persistence, you can control your emotions and losses.

Written By

Seema Singh Rathore

Linked in

Foundation Lessons for a Beginner in Stock Market

Foundation Lessons for a Beginner in Stock Market

Learning fundamentals is the first step towards learning Share Trading secrets for any Novice trader or Intermediate stock market trader. Get hold of your basics and loosen your sting to follow the road from fundamentals.

Concentrate on Trending stocks to prolong your profits. Be watchful in your selection of stocks in your portfolio. Don’t get disturbed by the turbulence in the market.

Additionally, What is expected from a fresher is to concentrate on stocks in the news (economic, political, national, international etc.). Of course, this will help in catching the impulse of the market for a day trader.

Finally, you have a grasp of the fundamentals of stock you have selected. With technicals, Our aim is to make money by analysing the market. Studying less volatile stocks affected by micro or macro factors of industry gives experience. Follow a stock for 15~20 days and understand the market indicators.

If you want to give trading your best fling, get ready for all type of challenges. These challenges can be financial, emotional or psychological. Not to mention, You are striving for the best, so get prepared to train your mind. Again, It’s not only the Money in your wallet that decides alone your fortune in the market. Money comes with the stability of your mental frame.

Overall, you have good control of the fundamentals coupled with technical and psychological part of stock trading. In short, Go ahead and make profits from the market. Trading is a test of endurance where you create wealth bit-by-bit, gradually. To summarize,  It’s not an overnight journey to a millionaire’s account. In fact, persistence to stand the up and downs of the market and you are in the best time of your life – profits continue to creep in.

Author

Seema Singh Rathore

Linked in

How did Rajeev turn 22 thousand into approx 20 lacs in just 10 months?

How did Rajeev turn 22 thousand into approx 20 lacs in just 10 months?

We all get that one unintended chance to make fortune at least once in our lifetime, Don’t you agree? Waiting for the break and getting into action once you recognise that chance is what’s best in this world. History has repeated itself many times and it will on keep on doing that. Why are we telling you all this? Well, Today we are talking about investment & trading in stock market decision which turned out to be so good for Rajeev.

In 2017, Every equity stocks were ready to set up a new record but weren’t just ready yet. Many investors were searching the market for right investment but couldn’t find any in Indian Stock Market. Except there was one thing which was really HOT at the beginning of 2017. You guessed it! Cryptocurrencies. Yes, We are coming on that now.

What is cryptocurrency?

According to Wikipedia, a digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank.

Without making it too complicated

Cryptocurrency is sort of currency which runs on a platform called blockchain, and it is limited and mineable. In total only 2crore 40 lacs Bitcoins can be mined. It is used to transfer money from one location to another without involving Banks and government.

In 2017, Cryptocurrencies were on fire, like a hot selling cake. Every investor wanted to get a pie of the cake and so did Rajeev. Rajeev is a college graduated, completed his graduation in 2015. He was keen to know more about Trading and investing in the stock market. He started trading when he was 18.

Most of his trades were unsuccessful, but he still managed to make money from the stock market. He aimed to make money from the stock market without having to invest too much or with little risk. News introduced him to cryptocurrencies and that grabbed his attention. Bitcoin was skyrocketing every single day and was so expensive to afford. Rajeev had only 22,000 so he checked for the second best currency, that when he got to know about Ethereum.

Ethereum is similar to bitcoin but was less in cost. Here is the chart of Ethereum.

Ethereum chart, crypto currency courses

He decided to invest his money in Ethereum. He got an entry at $13 dollars which was approx.  Rs 884 on Feb 19, 2017. He got 24.88 Ethereums which he transferred in his cold wallet. There were ups and down in his way up to the top but Ethereum performed really well during that year. Here is the table of the performance of Ethereum and 3 other currencies for your reference.

 

 

Ethereum price skyrocketed during that year, In Jan, the price was $1219 approx rs 82,892. Since Rajeev bout 24 Ethereums, His total earnings from that single currency was Rs 2,062,352.

Now, this was an amazing thing clearly, getting 9737% of growth in 10 months was unexpected.

Now we are not saying you get this opportunity every day or month, but it is something you can always look for.

Thank for reading this post.

BONUS Q&A

  1. Will cryptocurrencies go up again?

According to some known investors and celebs, it might touch $50,000 in 2020. But some names beg to differ and suggest it is nothing but a fairy tale. We do not know which side to chose but here are some pros and cons which can help you decide whether to invest in cryptocurrencies or not

Let’s discuss the cons first

  1. Consumption of electricity in mining bitcoin is so high, according to news, it is almost as much as a tier 3 country total electricity consumption.
  2. Price is not stable and hardly will ever be. Unless bitcoin gets in every hand, the price of one bitcoin will remain highly volatile, which means it would be difficult of it to be used as regular currency.
  3. As far as blockchain is concerned, Many countries are interested in adopting the technology in their system, but might not accept bitcoin as the medium of exchanging goods.
  4. Banks are so strong right now in the market. Bringing bitcoin in the market will directly mean removing the banking system, which we hardly believe is gonna happen.
  5. It is directly related to technology, Considering few countries are very low in literacy lat and below the poverty line, in other terms, it may be difficult to use bitcoin as a universally accepted currency.

The pros

  1. You can send money all around the world with one click. Just need to pay very little fees.
  2. Easily carriable and totally private.
  3. Highly volatile which means it can be traded for profit.
  4. And so more.

Let us know how do you feel about bitcoin? Do you think one should consider investing?

Learn How to Trade

If you want to trade but doesn’t know where to start? you are not alone. Many Neophytes try their luck at the market casino now and then, but walk with nothing but loss. Majority of those who lose have particularly one thing in Common. Can you guess? Well, They basics are not strong enough. Taking adequate time to learn the knowledge can help you spare some short-term profits.

Head Education Center l Moti Nagar l ISM – Institute Of Stock Market

ISM has opened its Head Education Center In Moti Nagar,  You can check the Beginner, Professional and Advanced courses on our  Website, or you can walk in straight to our Center.

We will be delighted to offer the state of the art classroom to our students, It includes all the necessary tools one require to trade like a pro in the stock market. To become a successful trade one need dedication and a lot of practice. Think about what a doctor does before they ever do their 1st surgery and get that first big paycheck. There were years of stuff that goes on before, Now obviously we don’t have that 10 years to learn how to do this, what we have to do to is to take some serious time to really sit there and learn information and then practise it in.

Word of advice, once this class is over, you gonna have solid knowledge, not just stock market but some techniques you can use that can actually trade.  One of the things we recommend after your done with the class is to review your notes and study your notes. Before you ever commit any of your money in a the stock market, practice trade.

 

 

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