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Golden Rules for Trading in Stock Market: Top 10 Basic Rules

Key Points to Consider While Opening a Trading Account Online

Trading in the stock market is not as easy as it seems, there is risk of losses equally the chances of getting profits. But if you trade with certain rules you can trade wisely and make the trading journey profitable. Long-term investing could be a better option for people who believe in making money in the shortest time and can try their luck in the stock market with share market trading rules.

Trading with the golden rule will not only help you to maximize your chances of booking the profits, but it will also help you minimize your losses and you can exit from unprofitable trade positions timely. Though it is not possible to follow or trade with all these rules, while trading in short-term or intraday keep in mind these rules. So, let's talk about the stock trading rules.

10 Golden Rules for Trading in Stock Market

#1 Trade with the Market Trend

Moving against the wave will make your swimming difficult but it can cost you more. Similarly, creating a trade position against the market trend can cost in terms of losses or your trade position might remain stable. This rule applies especially in day trading because when you trade as per the market trend there is a higher possibility of movement with a market index.

Also Read: How to Find Trending Stocks for Intraday Trading: Ten Rules

#2 Pick the Right Stock for Trading

Another important rule of trading is always picking the right stock that has sufficient liquidity and trading volume in the market. If you pick the illiquid stock, it will not move as per your expectations and you will also find it difficult to sell or exit from the position within your time frame.

Stock with high volume is highly liquid and also moves as per the trend and their technical indications. Also don't go with the stock with a high share price, which means a stock with a very high price of each share is also not suitable for trading as there is no significant movement in such stocks in one day.

#3 Always Use Technical Analysis

Trading without technical analysis is like playing a blindfold game in the market. Use the technical indicators before creating or entering into any trade position. Using the candlestick chart patterns and technical indicators you can easily find out, where you buy, where to sell or at what point book profit or exit from the position when stop loss is triggered.

For intraday trading, short-term trading technical analysis is very important to make your trading position more reliable. This is one of the important rules in trading, while for investing for the long term you need to rely on the fundamental analysis that will help you find the intrinsic value of stock.

#4 Risk Only That Much You Can Afford

In trading, you can lose money as the market is sometimes very volatile and direction is unpredictable. Hence, bet the money into trading that you really don't need or not use from your personal savings kept for any other important purpose. For intraday trading or short-term trading, you should have the courage to incur losses or take the risk that much you can afford to lose.

#5 Always Trade with Stop Loss

In trading it is not necessary, the stock needs to move as per your expectations, as there are many factors that work behind the movement of the stock market and individual stocks. And if you play the trading game without limiting the loss you can incur the major losses. Stop loss is the trigger point used to exit from the trade position and limit the loss, if stock moves in the opposite direction.

Also Read: Stop Loss in Stock Market: How to Set Stop Loss Strategy & Take Profit

In buying positions, the stop loss must be somewhere below the buying point and sell position or short-selling, the stop loss is somewhere above the selling point. To know the right stop loss points you can take the help of the technical analysis that will tell you the more accurate levels.

#6 Always Book Profit on Stock Gain

Booking the profit is a must when your stock gain is one of the most important rules of trading. Some people become greedy and even after having the momentum in their stock wait for more profits. But many times after having such momentum stock comes at the same level, and if you missed the opportunity and did not book the profit, then you are enjoying a notional loss.

Also Read: What is Profit Booking in Stock Market: Rules & Best Strategy

Booking the profit at some point in time is an art of making our trading journey profitable. Hence, while entering into a trade position, always set a target point and when the target is achieved immediately exit from the trade position and have some profits in your hand. And sometimes when you get a little bit of profit and it seems the stock is not likely to move further, then also book the profit.

#7 Keep Patience, it Pays Off

In trading keeping patience is another important rule many traders do not follow and many times they regret making the decision in haste. After entering into a trade position keep an eye on that but also keep patience, sometimes stock moves as per the market direction it takes time.

When traders start betting on your stock it will also move and will give you the return. And when your stock moves in the opposite direction you should also keep patience, not to exit at the initial stage. Sometimes, there are false spikes in the stocks and they move as per your expectations later on.

#8 Keep Your Emotions Away

Becoming emotionally attached to any trade position or stock can blackmail you and become the one the major reason behind the losses. Yes, keeping the emotions away from trading is one of the golden rules of trading that you should avoid.

While taking a trade position or booking the profits always consider the technical factors, and never think emotionally that the stock might move in this direction, as the technical indicators give the true signal as per the trading positions in the stock.

#9 Learn from Your Mistakes

In trading it is not necessary for you to always earn a profit, there are equal chances of losing your money, hence learn from your mistakes and why you incurred the losses. Keep a record of each transaction and analyse the situation or entry and exit points and other factors why your trade goes wrong.

Learning from our mistakes is one of the best experiences to make your future decisions more strong and reliable. It will help you to avoid making similar mistakes again in trading and also encourage you to make the right decision when such situations come again during trading or investing.

#10 Be a Student in the Stock Market

In the stock market, no one can become an expert, even if he or she has gained many years of experience in trading or investing. And you should never think that you have become an expert in trading, even though you are earning profits and your trade decagons are right, be a learner and keep learning. Always be a student and learn from every kind of situation or different market conditions and the movement of stocks and their behaviour in various market situations.

This kind of learning approach will always help you make the right decisions in trading. Keep analysing the various factors like economic, news and political events and how they affect the market movement. It will help you to interpret this kind of situation easily in future and you can make better decisions in trading. So, be a student in the stock market, no matter how old you are in the market.

Also Read: What are the Top Factors Affecting the Stock Market in India

What is the 3-Day Rule Stocks?

Apart from these ten golden rules for trading in the stock market, there is another rule called “3 Day Rule Stocks” that every trader should follow while trading in individual stocks. This rule dictates if a stock moves up, you should not buy the stock on the first day, as the price may be temporarily inflated and could come back in the next few days, hence you should wait 3 days to buy.

However, such rules are not always applicable in the stock market and for intraday traders this rule would be not applicable, as they often buy or sell stocks within the same day for 1 to 2 days, hence they cannot wait for 3 days. However, in long-term investment, 3 Day Rule Stocks can be followed.


These are the rules for trading in the stock market that you can follow while creating trade positions in the share market. Though these are not considered as a thumb rule but encourage the traders to trade in a disciplined way, which helps them not only maximise their chances of earning profits in trading but also minimize the possibilities of losses, especially for intraday trading.

However, to make intraday trading or short-term trading take the help of the market experts who can give you better insights and recommendations in trading. Hence, choose the right discount brokerin India and open a trading account and demat account to avail of such services.

Moneysukh can help you right here is making your trading journey easier and trouble-free with the best trading platform for investing and trading in the equity market, commodities and currency market.Here you can also get stock recommendations for day trading and long-term investment with the facility to invest in IPOs, mutual funds, and ETFs at one click through various devices across the platforms.



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    Per order + Get Instant Pledge Benefits* + Zero delivery Brokerage


    Per order only (No hidden charges)

    Open FREE Demat Account in less than 10 minutes


    Per order + Get Instant Pledge Benefits* + Zero delivery Brokerage


    Per order only (No hidden charges)

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