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1. I take the opportunity to write this post for the day traders as a single market crash and same mistakes are repeated and same should be avoided to burning the hands.
Do's and Don'ts for day Traders
2. As a thumb rule identify a good company and invest a fixed sum in that as a SIP (Systematic Investment Plan).
3. One must pick sound and fundamental companies only and do not trade on rumours.
4. Make it a point to book profits when the stock rises above an individual expectations as none has gone broke booking profit. For eg if an individual has purchased a stock at Rs. 200 with a target of Rs. 300 over next one year. One sees that the stock rise by 15-20% within a month. Make it a point to sell at least a part of the holdings. This will reduce an individual holding cost. Even if you sell 25% of the shares at Rs.240, your cost for 75% holdings gets reduced to Rs 186.66.
5 . Remember if one is holding fundamental companies than their is no need to panic incorrections/crashes andthis doesn't hold good if one is having companies with poor or zero fundamentals.
6. Keep yourself abreast with companies' fundamentals. Do not hesitate to get out of a company when the results are poor. Do not get married to a stock.
7. Always keep at least 15% cash as one can use the same to buy quality stocks at sale during any mega market crash.
9. If you are a retired person, do not invest more than (100-age) % of your funds in equity as risk profile reduces.
10. Understand a company business and than only invest and remember that fundamentals of a company will speak for itself.
12. Do not bask in old glory of profit and keep on having book losses mount and remember to cut losses at 8%.
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