4 Qualities of a Good Trader

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Financial literacy is rising rapidly in India, so with this lot of new traders are coming into the stock market.

Many new traders think that trading is a quick way to make profits, which is right but without any knowledge and experience it can also become the opposite, yes you're guessing it right, Losses!

So what does a good trader do?

Let's get into our topic of 4 Qualities of a Good Trader:

1. Avoid Penny stocks- A penny stock is a stock of a small publicly listed company and it is very illiquid which means the buyers and sellers are very limited so your order stays open until there is a counterparty and sometimes the trading gets halted in such stocks.

Also, the price of such stocks are very cheap like Rs 10, Rs 50 etc, so this price attract the new traders and they buy in more quantities but are unable to sell due to less liquidity and circuit limits.

So a good trader stays away from penny stocks and always trades in liquid stocks that can be bought and sold hassle-free.

2. Stop loss- Profits are an important part of the trading but in the same way, how much you can afford to lose is also important in case the trade goes against you.

While trading, stop loss plays an important role, a good trader always put a stop loss.

For example, you have purchased a stock at Rs 100 on intraday and you put a stop loss at Rs 90 which means If the stock price falls to Rs 90 then it will get sold automatically and you will only lose Rs 10 and not more.

3. F&O trading- Futures and Options is a high risk and high reward segment. Nowadays many new traders are choosing F&O without knowing its risk and it is due to the 'Greed' developed in their minds by watching big figures income on Youtube or some telegram channel.

I believe F&O trading is like walking on Land mines, one minor misstep and BOOM.

A good trader always tries to avoid F&O If he doesn't have any knowledge and experience.

4. Break from trading- Everyone advises you to start trading as soon as possible but no one tells you when to stop.

You spend a lot of time in analysis, reading news, updates and other stuff and there can be days when you're not making money or just bearing losses.

Trading can become mentally taxing but does this mean you should quit trading? Absolutely NO.

There's always something called 'Break' or a mini-vacation where you can enjoy or hang out with your friends and family. You can go for a short trip, play games or do anything so that your mind becomes super refreshed. 

A good trader always knows when he has to take a break.

Spread the word ;)

See y'all in the next blog, Cheers!


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