What is that common thing among greats like Roger Federer, Charlie Chaplin, Sachin Tendulkar, Muhammad Ali, Arnold Schwarzenegger, Cristiano Ronaldo, Michael Phelps which made them highly skilled and successful in their craft? They all studied and learnt from other greats in their respective domains. They put in the required hard work to build those habits, routines and techniques which can make them champion. They visualized them as winner on the field even before facing the opponent. They overcame all the mental barriers which pulled them back from achieving great feats. They prepared over and over again for various scenarios to increase the probability of their triumph. Trading or investing in the stock market is exactly the same.

Trading takes patience and hard work

It takes years of hard work and struggle to find your own system in trading or investing. Many successful market participants initially made many mistakes some of them even blow up their accounts then eventually learnt from their mistakes and after studying other successful market participants. You must focus on one style- are you a scalper, day trader, swing trader, positional trader or a value investor? Are you comfortable with 1 minute or 5 minutes or daily or weekly or monthly time frame. All the time frames can be mastered it really does not matter. The question is- which time frame suits to your personality? The good thing is now we have access to the learnings and outcomes of those successful market participants which we can study and implement without reinventing the wheel. Here are some of the great traders and investors, and books written on their work which you can study.

• Secrets For Profiting in Bull and Bear Markets by Stan Weinstein

• Trade Like a Stock Market Wizard by Mark Minervini

• Trading in the Zone by Mark Douglas

• How to Trade in Stocks by Jesse Livermore

• Reminiscences of a Stock Operator by Edwin Lefevre

• How I Made $2,000,000 in the Stock Market by Nicolas Darvas

• How to Make Money in Stocks: A Winning System in Good Times and Bad by William J. O'Neil

• 100 Baggers: Stocks That Return 100-to-1 and How To Find Them by Christopher W. Mayer

• One Up On Wall Street: How to Use What You Already Know to Make Money in the Market by Peter Lynch

• MASTERING THE MARKET CYCLE by Howard Marks

• The Intelligent Investor by Benjamin Graham

• Value Investing and Behavioral Finance by Parag Parikh

  
  

Stay optimistic, stay focused and stay disciplined

As a market participant in the stock market it pays you more to be bullish or neutral over long term instead of being bearish. Everyday we see new businesses emerging, new inventions happening in science and technology they will eventually be transformed into a business and pull in investors who will see the value and invest in the company, and keep the market afloat. Hence, be optimistic about the progress around you. No strategy works all the time in the stock market as the market cycle changes your strategy may become ineffective but it does not mean that it will never work, despite of those periods when your strategy remains ineffective you have to stick to it. Study the nuances of it so that you understand it in and out, and know exactly when it will bring results for you and when it will be ineffective. Stock market is dynamic, it throws new puzzles at you each day hence, as a market participant always remain committed to learning. Build a process which can give you outcome with a clear system(situational awareness, scanning, setup, entry and exit tactics), risk management rules, journal, post trade analysis, trading plan etc. and judge your trading based on the process whether you followed your process and not on the basis of money gained or lost in a trade. Trading is a very lonely profession sometimes it gets onto your nerves, to best avoid such scenarios maintain a dairy where in you can write about your emotions, wins and losses for the day. This is one thing where I need to work more, I have always been inconsistent in maintaining such diary but now I guess I will try my best to be consistent at it. Along with that avoid social media at all costs- your decision to invest or trade should come from your own analysis. It is fine to consume good educational content to level up but don't act based on random tips without understanding the logic, context and environment or get influenced by seeing lifestyle or P&L statement of other traders or investors, after all it's your hard earned money. Seek continuous feedback from the market and your own trading

Always maintain a journal about your past and present trades keep reviewing it on daily basis so that you remain in sync with your trading mathematics. If you would like to know more about the template of a journal you can click here and read. Evaluate the market environment to have a sense of market cycles on long, medium and short term. Practice progressive exposure to trade your largest when you are doing best and the smallest when you are trading your worst. If you have a large account then this technique works the best. In case you see fake breakouts, multiple trailing stops getting hit in a row, scale back and re-evaluate the situation. If you are coming out of a correction always risk less to open pilot positions if they work then only increase the exposure. Focus on high quality stocks which have to potential to run higher and faster

Study winners of past years, see what all qualities they had before they became 2x-3x in a short span of time. Stocks which go higher show strong accumulation by institutions which you can identify by seeing the volume activity- Highest Volume in a Quarter(HVQ), Highest Volume Ever(HVE) or Highest Volume in a Year(HVY), price above 200-day moving average, breakout from 2 months to 2 years base, price retesting the key resistance level, volume dry up on pullback are some signs of strong accumulation by institutions. Whenever there is a correction these stocks resist the fall either they go sideways or show very less correction with low volume this is called relative strength. Scan stocks which have beaten the Index on 1-month or 3-months basis. To have an idea of relative strength of a stock you can visually compare it with NIFTY 50 (represents large cap stocks) or NIFTY 500 which also includes mid and small cap stocks. Always consider stocks which are in prior uptrend. Focus on the sector, stocks moving together, earning surprises, breakout in growth and sales (quarter-on-quarter), increasing order books, newly IPOed stocks breaking out from their base, rate cuts by central banks etc. these are some of the strong catalysts for taking up the price higher. Manage risk by looking for low risk, high reward opportunities

Use candle stick charts to analyze price and volume, study patterns or setups which have proven them over time. Master one setup or chart pattern to time your entries and manage risk. Trader's biggest edge is position sizing and entry tactics. A logical stop loss zone can help you manage risk and get out of the trade if the level is breached by the price. Chart reading is not only useful for traders, it is useful for investors as well who intend to hold the stock for few months to years, as it gives them conviction too. You can read more about how to analyze trend. Never ever risk more than 0.5%-1.0% of your total capital in one trade. Use position sizing to calculate the no. of shares you should be buying as per your risk. Your maximum risk per trade should not be more than 5% of the capital deployed in that trade. You can read more about how many shares to buy with the complete system to trade, if you are a working professional and does not have a lot of time to give to the market.

Establish routines and practice discipline

Have a system to catch a winner at its early stage which means scanning the market on daily or weekly basis, prepare a secondary list of stocks for the entire week and then scan it on daily basis to prepare the primary list which should not have more than 5 stocks, set price alerts to get the notification whenever the price crosses a key pivot. Practice meditation on daily basis, choose your favorite physical activity to keep yourself in shape, eat healthy food, read books on trading, investing, self-improvement, be grateful to God, your loved ones and mentors even those who put you down because it is because of them you decided to get back and fight. Visualize yourself winning the game in your mind before it actually happens on the ground. Take note of your day- to list your wins and areas of improvement. At the end of the month analyze your trades for the entire month and note down areas of improvement. Below is the screenshot(Fig:1) of how I maintain my lists- Indices, Portfolio, Primary, Secondary. Indices has all the indices including sectors, then Portfolio has stocks which I hold presently, Secondary list is prepared over the weekend and from there comes the Primary list in which I keep 7-10 stocks.

Sell systematically and objectively

Selling is the most toughest and essential part of a trading system, as it brings money to your account. Let me give my comprehensive view about selling. In the stock market, we as an individual trader or investor are against many unknown forces, UHNIs, FIIs, DIIs etc. and they have access to the best tech, infra and human talent but still you can make money, consistently grow your account year-on-year. When I have taken the correct entry in a stock and it goes 2rr or 3rr(risk-to-reward) of the money I risked, I sell 30% of shares. For example, if I have risked 50k on a trade as soon as it gives me 1L of profit, I sell 20-30% of it. It means I am paying myself for the research I have done, price alert I have put, the days I have tracked the stock. So, it is my fees which I pay to myself and then I bring the trailing stop at the cost, this makes sure that I won't be losing any money now If the market is trending then the stock will soar higher and then I trail it with the higher low or 20-day moving average whichever is higher. Also, on the way up I I keep selling some in strength. For example if a stock moves 5-10% or more (for midcap and small cap stocks), in a day then I will sell 20-30% more and so on. If its a large cap stock then 5% move in Indian market is big enough. If the price comes back at your buy point, it means either the market environment is getting choppy or the entry was not right. Which needs further analysis but in both the cases first save your capital and do the analysis from the sidelines when you can see the things clearly. If a stock has vigorously moved, like 30-40% in 4-5 days then I will sell 50-60% and then trail the rest with 20-day moving average if the stock has given 60-70% within a week or so then I will sell 70-80% & trail the rest. I will publish a detailed blog on selling, as it is a vast topic and there are many things to consider. But to start with, you can follow the above mentioned method.

Hunt like a lion

You don't need to jump on every trade or lookout for trades on daily basis. Wait for the right market environment, catalysts, price and volume to build, strong sectors to emerge and then take trade with good position size with high conviction so that it can create an impact on your portfolio. I don't recommend putting 20%-25% of your capital in one trade but there are people who put 100% or even 200% capital in one trade, I guess, I am more risk averse. It totally depends upon you I do what works for me as per my personality. But never ever forget risk management and position sizing, the fundamentals will always remain the same and they will protect your account from risk of ruin. At a time I don't have 4-5 trades open, as I believe in concentrated bets and managing 4-5 trades is easier for me. Learn & improve, learn & improve, learn & improve

I don't believe that anyone can master the markets. People who have been successful in this business have stuck to relentless hard work, ethics which have helped them stick around longer and of course, the God blessed them. Learn from other successful traders and investors, there will always be the scope of learning and improvement even if it improves your process by 0.5% it will have compounding effects over the years. Read previous winners candle by candle, since I am swing trader on daily timeframe hence, I would recommend you to go over candle stick charts on daily time frame candle by candle to understand how the stocks move. Identify what went wrong, what went well, did you follow your trade plan, were you disciplined enough to not trade in poor market environment, did you followed your stop loss, did you buy in FOMO, did you follow news, tips or relied on your own research and analysis these are some of the aspects of your monthly and quarterly reports that you should publish to reflect on your journey and narrow down on the areas of improvement.

This brings us to the closure of this blog. I hope you enjoyed reading it as much as I enjoyed writing it. If you liked what I wrote and are serious about creating wealth from the stock market you can become the part of Eight Figr League, a credible platform for market participants through which you can know the pulse of Indian, US, China and European stock markets, connect with other great traders or investors, get daily updates, get well researched weekly newsletter prepared by qualified traders and financial analysts, learn fundamental and technical analysis, connect with me over video call. Your one month is on us, then it is just ₹22 a day.

You can also connect with me over LinkedIn and X(Twitter) or watch me speaking on YouTube about trading, investing and mindset. I'm a student for life, so don't hesitate to send over your views or sources to help me enlighten myself. If you are a beginner and want to learn how I do what I do. The below series of blogs will help, to be read in chronological order:

• What to expect from trading?

• Does technical analysis work?

• How to read the stock market?

• Why risk management in the stock market is your lifeline?

• A Gambler's edge in the stock market

  
  

Thank you for your time. Have a great week ahead in creating sustainable wealth!