Share Market Trading is a lot like any other business. In any other business, you deploy some funds in establishing it and then devote time and efforts to grow it. In the same way, you should put some funds in stock market and devote time and efforts to grow them. That’s how you can earn money in the market. There are two major ways to make money in the Stock Market – Investment and Trading.

Here, we’ll be talking about Trading. There are majorly two types of trading.

1. Intraday Trading
2. Positional Trading

Further, there is another type of trading which actually is a strategy that can be applied in both the trading types. That is called Swing Trading.

How to Start Trading?

In order to start trading, you need to develop a mindset, arrange funds, and learn a couple of simple strategies. Let’s talk about these steps one by one.

Develop a Mindset:

You first need to understand that trading is a business, and if you treat it as business, you’ll make money. On the other hand, if you treat it as gambling, you’ll lose the money. Most people lose money in the stock market because they try to earn a lot of money through shortcuts. They deploy a small amount and try to multifold it in a very short time span which is gambling.

Like any other business, you should be very specific while making a trading decision in the share market also. I am sharing some key insights that can help you to develop a strong trading mindset.

1. Never buy a stock because it is cheap, buy only if it shows some value.
2. Never buy a stock because it is rising, buy it only when it is rightly positioned.
3. Never take a trade because someone else thinks it is a good bet. Always do your own research.
4. Never repent that a stock, that you have not bought or have already sold, has surged well. Move on to look for another opportunity.
5. Always keep a realistic target, don’t keep a target based on your emotions.
6. Always keep a stop loss and follow it because it’ll help you to protect your capital.

Arrange Funds:

After you have understood the above-mentioned points of trading mindset, its time to arrange funds for trading. While arranging funds for trading, keep in mind that you are not taking any loan. Also ensure not to raise a lot of money initially, arrange a small amount that would help you to practice. This way, you’ll not earn any substantial profit initially but learn a lot without risking big money. Another thing to remember is that the trading funds should not be taken out of any emergency fund. The emergency fund should not be broken for trading because your money deployed in trading is always on risk.

Learn Trading Strategies

Now because you have developed trading mindset and arranged funds, its time to learn trading strategies. There are plenty of strategies to make money through trading in stock market. Here, I’ll talk about a few most simplistic strategies.

Moving Average Crossover

This is my favourite trading strategy and I use it for most of my trading decisions. It is very simple, you just need to apply two moving averages on the technical chart, maybe 09EMA and 21EMA. After that monitor their movement, you’ll find one of them crossing the other, after the formation of a few candles. If 09EMA crosses above 21EMA, take a buy trade. On the other hand, if 09EMA crosses below the 21EMA, take a sell trade. Don’t forget to keep a stop loss below the low (above the high, in case sell trade) of the candle that formed previous to the entry candle.

RSI (Relative Strength Index) Divergences

RSI Divergence is one of the best and simple trading strategies. I have used it a lot and still use it for many of my trading decisions. In order to trade using this, you need to apply a 7-length RSI on the technical chart of a stock. After that, monitor the price movement along with the RSI movement. Whenever you see either of the below mentioned setups, its time to enter a trade.

• If the price is making higher highs but RSI line is making lower highs, it’s time to sell.

• Alternatively, if price is making lower lows but RSI is making higher lows, it’s time to buy.

I always got wonderful trading signals from RSI divergences and you can also use them to make your trading decisions. The only thing you need to remember is to keep a strict stop loss. If you have taken a bearish trade, keep the stop loss above the most recent highest high. On the other hand, if you have taken a bullish trade, keep the SL below the most recent lowest low.

Chart Patterns

The chart patterns are also one of the best ways to make trading decisions. Market participants use several chart patterns to decide their trade, albeit I prefer double top and double bottom the most. Check out the article below to learn them.

Besides these, there are plenty of other chart patterns which can be used to identify the trade. I’ll share a few more strategies here later on.

Things to Remember While Trading

Along with the above mentioned points, there are a few more things to remember before taking an entry. Here, we’ll discus about them:

• Keep the right size of trading position
• Set a stop loss and strictly follow it
• Exit when the target is achieved