Trading in the Stock Market can be very beneficial, if the things are planned in a proper fashion. In this article, we will discuss a clear road map, which can take you towards success in your stock market venture. The traders should follow the guidelines mentioned in this article, even if they are taking help from the advisory firms in form of Stock Futures Tips and Stock Option Tips.
Firstly, the new trader should acquaint himself about the Stock market. The complete working of the Stock Market should be understood by the trader as well as the working of different segments. Once, the trader knows everything about the stock market, he should look for a strategy, that he will use while trading. It should be kept in mind that the strategy has a good Reward-Risk ratio. Also the success rate of the strategy should be high. On an average, the success rate of the strategy should be more than 60 %. Also the reward risk ratio of the strategy should be more than 2:1. Following of these two conditions will lead to success and profitable trading in the long term.
One can research his / her strategy from the resources available on the web. One can also look for some good books on the Stock market. Once the strategy to trade is finalized, then one should look for a brokerage firm. The trader will have to open a Demat account, to buy and sell shares. It is advised to look for a brokerage firm, which is charging less brokerage as compared to others. Also, the brokerage firm should be a reputed one as well as one which is regulated by SEBI.
Once, the trader has a demat account opened, he can trade in the Stock Market Segments like Cash Segment, Futures Segment and Options Segment. Here, the trader will have to decide, whether he wants to trade in the Options Segment, Futures Segment or the Cash Segment. For some traders, the Options segment is best and for others Futures segment is the best segment to trade. This depends on the personal choice as well as experience of the trader, to decide which segment to trade in.
It is advised that before starting trading in the Stock market, the trader should back-test his strategy based on the historic data. If there is a good profit in the back-test, then the trader should go ahead with trading. Also, the trader should do sufficient paper trading before investing the real money in trades.
The trader can also follow the alternate path and take the help of advisory firms in form of Stock futures Tips and Stock Option Tips to trade effectively.