Top 10 Trading Rules in Stock Market That Every Trader Should Follow

Do you want to become a successful trader? If your answer is yes, you have to follow a set of trading rules in stock market

These rules help you make smart decisions, manage risks, and improve your chances of success. They cover handling risks, analyzing market trends, and planning your trades. Following these guidelines creates a solid strategy for long-term success in the changing world of financial markets.

So, in this article, let’s cover the Top 10 stock market rules that every trader should follow, reasons why you should follow them, and the key elements of a successful trading plan. 

Trading Rules in Stock Market

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Why should you follow the rules while trading?

Trading in the stock market is not everybody’s cup of tea; it is very tough. Which makes following rules while trading very important. Here are some reasons why every trader should follow stock market rules while trading – 

  • Rules help investors make smart decisions by providing structure and guiding research. 
  • They prevent impulsive actions influenced by emotions, promote risk management to avoid big losses, and ensure a disciplined approach. 
  • Other than that, rules create consistency in trading strategies, increasing the chances of long-term success.

Top 10 Trading Rules in Stock Market

Top 10 Trading Rules in Stock Market


Rule 1: Always have a trading plan ready

If you are a beginner and don’t know what a trading plan is, don’t worry we got you. A trading plan is like a set of rules for a trader, stating when to buy or sell and how to manage money.

Try out your trading ideas using today’s technology before using real money. Back testing (a method that will help you test your plan before investing your real money) lets you see if your plan works by applying it to past data. You can use the plan for actual trading if it shows good results.

The main thing here is to follow the decided plan. The key here is to stick to the plan. Abandoning your trading plan, even when you are winning, is not a good strategy.

Rule 2: Treat Trading Like a Business

If you wish to be a successful trader, you must shift your perspective. Make sure that you approach trading as your part-time or full-time business instead of a job or a hobby. 

If you think of it as a hobby, you won’t commit to it the same way. And if you approach it like a job, then you are bound to get frustrated as you won’t be getting any paycheck. 

Trading is like running a business; it has costs, losses, taxes, uncertainty, stress, and risk. Like small business owners, traders need to research and plan to make the most of their opportunities.

Rule 3: Use Technology to Your Advantage

In the competitive world of trading, it is safe to say that your competitors are using the available technology to their advantage. 

So make sure that you use the technologies like backtesting and charting platforms to your advantage. Now, you must be wondering what the use of both technologies is. Charting platforms provide different ways to analyze markets, while backtesting with historical data avoids costly mistakes. 

Monitoring trades on smartphones offers flexibility, and even basic tech like high-speed internet can improve trading performance. 

Using technology and staying updated on new products can make your experience rewarding and enjoyable. 

Rule 4: Protect Your Trading Capital

Saving money for funding your trading account is not everybody’s piece of cake, as it takes a lot of effort and time. And it would be even more exhausting if you had to do it twice. 

Protecting your trading capital doesn’t mean avoiding losses altogether; every trader faces loss at least once while trading. It involves reducing risks and taking required steps to protect your trading business.

Rule 5: Become a Student of the Markets

Think of it like continuous learning for traders. They should always focus on learning more as understanding the markets is a lifelong process.

Traders use hard research to know facts, like understanding economic reports. Focusing and observing help them sharpen their instincts and learn the details.

Things like world politics, news, and the weather affect the markets. The market is always changing. The more traders know about past and current markets, the better they can prepare for the future.

Rule 6: Risk Only What You Can Afford to Lose

Before you use real money, make sure you can afford to spend the money in your trading account. If it’s not, save more until you can.

Don’t use money from your trading account for college or mortgage. Think of it as separate from any of the important expenses. Losing money is tough, especially when it’s money you shouldn’t have risked in the first place.

Rule 7: Develop a Methodology Based on Facts

Creating a good trading strategy is important. Avoid falling for online schemes promising easy money. Base your trading plan on facts, not emotions or hope.

Those traders who take their time to learn many times find it easier to navigate the vast amount of information available on the internet. Just as embarking on a new career requires a year or two of study at a college or university, mastering trading also demands a comparable investment of time in fact-driven research and study.

Rule 8: Always Use a Stop Loss

A stop loss is a predetermined amount of risk that a trader is willing to accept with each trade. The stop loss can be a dollar amount or percentage, but it limits the trader’s exposure during a trade. Using a stop loss can take some of the stress out of trading since we know we will only lose X amount on any given trade.

Not having a stop loss is bad practice, even if it leads to a winning trade. Exiting with a stop loss, a losing trade is still good if it falls within the stock trading rules.

The idea is to exit all trades with a profit, but this is not realistic. Using a protective stop loss helps ensure that losses and risks are limited and that you have preserved enough capital to trade another day.

Rule 9: Know When to Stop Trading

There are two reasons to stop trading – an ineffective trading plan and an ineffective trader.

An ineffective trading plan shows greater losses than anticipated in historical testing. That happens. Markets may have changed, or volatility may have lessened. For whatever reason, the trading plan simply is not performing as expected.

Stay unemotional and businesslike. It’s time to reevaluate the trading plan and make a few changes or start a new trading plan.

An unsuccessful trading plan is a problem that needs to be solved. It is not necessarily the end of the trading business.

An ineffective trader makes a trading plan but is unable to follow it. External stress, poor habits, and lack of physical activity can all contribute to this problem. A trader not in peak condition for trading should consider taking a break. After any difficulties and challenges have been dealt with, the trader can return to business.

Rule 10: Keep Trading in Perspective

Stay focused on the big picture when trading. A losing trade should not surprise us; It’s a part of trading. A winning trade is just one step to a profitable business. It is the cumulative profits that make a difference.

Once a trader accepts wins and losses as part of the business, emotions have less effect on trading performance. That is not to say that we cannot be excited about a particularly fruitful trade, but we must keep in mind that a losing trade is never far off.

Setting realistic goals is an essential part of keeping trading in perspective. Your business should earn a reasonable return in a reasonable amount of time. If you expect to be a multi-millionaire by next Tuesday, you’re setting yourself up for failure.

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The Key Elements of a Trading Plan

The Key Elements of a Trading Plan


The starting point is the knowledge for the trade. 

  • If from a fundamental development, such as an economic data report or a comment by a Fed official, your trade is based on those fundamental factors, and your trading plan should reflect that. 
  • If your trading plan relies on technical analysis, such as remaining above the 50-day moving average, your strategy should rely on that again. 

The key is to adjust your position size to give yourself enough room to stay within the stop loss and not risk everything in a single position. 

So, trading is all about following stock market rules and ke​​ep learning. If you are willing to learn trading, Upmarket Academy is here for you. So, check out and master trading concepts from basics to advanced, now!

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