SHARETIPSINFO >> Articles Directory >>How I Select Trades while doing trading in NSE and BSE

 

Selecting the profitable trades at the stock market is the key for success in stock trading. But as a trader you have to realize two things – you can make profit at every trade you do and there is no magic formula that will tell you which trade will be profitable and which will incur loss. So you need to have comprehensive knowledge and patience to judge every trading opportunity and select the trades that will get you good return in the future. Here we are presenting a step by step guide that will help you select the trades that will give you good return in the future.

The foundation for flawless selection of trade is a carefully thought out trading plan that you need to follow during the course of trading. Based on your fund and objective of stock market investment you have to derive at a trading plan or strategy. This is the plan that will decide what are the types of stock that you would trade? And what is the best effective way of trading that will ensure you achieve your objectives of stock market investment. Therefore, it is your primary duty to derive at a trading plan that will form the basis of your trading decisions. For example if you are looking for generating a regular income from stock market, you have to concentrate and give more emphasis on day trading.

On the basis of your trading strategy you have to start selecting the trades. This is simply because if you have opted for long term trading your choice of trades would be completely different from the stocks that are suitable for daily trading. So the basis of selection is primarily dependent on your basic trading strategy. But of course there are other parameters for selection of trade to ensure good return from your stock market investment.

For selection of the trades the first thing that you need to consider is the result of the fundamental analysis of the stocks. This is the first criteria of the selection of the stocks. There are certain factors that are considered for fundamental analysis of the company. Factors like sales revenue, earnings of the company, debt and financial liabilities of the company, EPS of the stock, P/E ratio of the stock – all these are the criteria that are need to be considered for the basic selection of the trades. As a trader you have to select the trade that involves stocks with higher earnings, lower debt and high P/E ratio.

The next step for selection of the trade is technical analysis of the stocks. On the basis of the current price and trading volume and through the methods of technical analysis one can scientifically predict the future movement of the stock price flawlessly. Technical analysis is therefore the final step for selection of the trade. In fact through technical analysis you can actually decide whether it is the right trade to do or not. As we get the optimum price level for investment after the technical analysis is done, you can have a comprehensive idea of the movement of the stock. It is the ultimate basis of selection of the trade and taking the right decision when it comes to selection of the trade. Apart from helping you to choose the right trade technical analysis also ensure that you do not miss any opportunity to make a profitable trade.

Lastly there is one aspect that you should always remember while taking trading decisions or selecting the trades. That is your trading decisions should be devoid of any emotional bias. You should never give in to any psychological pressure and ignore the numbers while making any trade. For example if a certain stock have given you good return but at present analysis shows that the stock will go down or show a reverse trend. At this point you can not afford to cling on to hold that stock in the hope that this stock will give you further profit. Remember in stock trading and taking trading decisions – it is the number that should speak the last word. Your trading decisions and selection of stock should be governed by the result of the analysis and the market trend.

 

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