Traders overtrade because they are hooked on the rush that comes from being in markets. Some overtrade because they feel that they will miss a golden opportunity if they don't trade. Some overtrade since they don't have specific enough entries to keep them out of the bad trades. Many trade in hurry without waiting for the opportunity. Some feel that if they trade ore, they may earn more money.

The real secret in trading in making more money with your trades: Learning to identify the best market opportunities.

So what are the guidelines or precautions that can be taken?

There are no strict rules that apply for everyone in all situations. But there are some basic understandings that should be kept in mind while we trade. They are as follows:

1) Stick to your guns - Running from the market is no solution. One should try to stay in the game and earn profits. Sticking to the trading plan and enacting trading disciple are the best ways to produce profits. Even if you are incurring losses, stick to your plan and this consistency will result in constant return from the investment.

2} Set stop losses and take profits - The most profitable trading is one in which we "Set and forget". One should remember to place exit along with placement of trade. Only when we set the stop loss, we can be saved from extra, or huge losses. Because as far as the market is concerned, the market can fluctuate at any rate and if the market moves against you at a very volatile situation, Stop loss can help to prevent such losses.

Technical analysis will tell you the best price/ selling (near resistance) and the best place for buying (near support).

Support and resistance points are the best places to put limit orders.

3)Don't watch minute to minute - The minute to minute movements should be avoided by the traders. It is difficult to have a potentially profitable trade after having minute to minute movements. Minute to minute watching will only increase the anxiety of the traders and can lead to haste decisions. Decisions taken hastily will only lead to wrong decisions. Constant watch of the market is a must, but minute to minute watching is not the correct way to proceed.

4)Trade as your capital allows - High levels of margins can be easily exceeded by the day trade that greatly exceeds the trading capital. If you are someone who does not have huge capital to invest, you can invest little capital in to the market. Never compare your investment to someone else’s investment. It is said that you can invest from about 10-12% of your free wealth in your investment. So if all the free capital you have is Rs 100, u can invest Rs. 10 in the initial stages.

Exceeding the credit limit can be very dangerous and it can accumulate losses as fast as gains.

Momentum trading with many different entry points can end up in costly mistakes if your account becomes overextended.

5)Exit while you are ahead - When you are earning your profits, stop being so greedy. And when we are losing, we tend to think that the market will turn to our favor. This is very dangerous minset for a trader. The tarder must watch and analyse the market, if he assumes how the market would move, he is digging up his own grave. This mindset costs the traders to be unsuccessful in major trades.

It’s okay to incur few losses, while sticking on to our strategies, rather than incurring repetitive huge losses due to our incompetence.

6)Start Small - As a beginner, focus on a maximum of one to two stocks during a session. Tracking and finding opportunities is easier with just a few stocks. While starting small, we tend to experiment and learn. The losses if incurred are also small and manageable. Also, if the study of stocks and options are done in small quantities, it will help the trader to get all the insights of the options available to him.

This will help them to understand the world of market and make better decisions spontaneously.

7)Be realistic about the profits - Don’t expect very huge profits with very less investment. The return you get will depend on your investment and the time you have involved. You can’t expect huge profits in a very short span of time. While you have realistic expectations, you intend to fulfilling them with good strategies. This will help the trader to be consistent with his expectations and his profits.

8)Deep Knowledge - Before entering any market, the trader must have a good knowledge about where he is operating. How to operate, when to operate will be known to a trader only after he has an in dept knowledge on the market. The decisions he take, will affect how he traders in future also.

Thus the knowledge in the market is the most basic and necessary criteria while trading.

9)Develop or adapt to some strategies - Always be with a plan. Without a plan, it’s like a trader lost in the deep sea. He needs to ensure to have a plan on when to commence, exit and which option to choose on what situation. He might deviate from the strategy when required, but there should be some strategy for him to operate. The plan can be some strategy that the trader developed on his own, or some common strategy

In the end, trading is just like another business. All the principles that should be used in the business can be used in trading also. The ethicals applicable to business are also applicable to trading.

Even more than you can imagine, successful trading can be achieved only with good disciplined usage of time, resource, straight mind, and use of strategies with sound knowledge. Trading is most successful with people who constantly adapt and learn.

In conclusion, trading can give us constant income on regular basis, if we know how to handle our trade with caution. We think we can double our profits or earn the losses of other trades by trading in bulk. All these hasty decisions would cloud the judgment of the trader.

Always the ONE basic rule of trading is: Market is the king, we should follow the market trend. Assuming that the trend will change and going against the market is the most foolish mindset of the trader.