You will find numerous articles and books floating all over the web explaining how you can make profits while investing in the stock market. You will face a large amount of jargon and technical terms thrown around such as the ROI, EPS, Dividends, and P/E ratio. I am not saying that these concepts are not important, but if you are someone with no financial knowledge all this might feel a bit too much. Therefore I intend to provide you info that will help you get into the correct mindset for Equity trading.

But first let's see if you want to be a Trader or an Investor: To start transacting in the stock market you first need to figure out if you want to be a trader or an investor. Trading involves purchasing and selling stocks on a frequent basis in order to make quick profits. You will have to be on your toes when performing any trade because the market goes up and down daily. This provides tremendous potential to gain profit but it also means that you can face a huge loss. On the other hand, investors are individuals who put in their money and sit back. Hold their stocks for a couple of years. They are in this game for a long term, they know that in the general course of business the economy will always go up. They also enjoy tax benefits, dividends, interests, and large profits. Everything is not rosy in long-term investing though, you are still exposed to market trends and company activities. Your stock's price can fall all of a sudden because of some scandal or wrongdoing on part of the people running the company. We have a history of such scams, but keep in mind the risk exposure is still less than regular trading.

Now you know which type of individual you are. Either you want to have an active approach or a passive approach. Let's discuss strategies to minimize your losses so that you are guaranteed to generate profits.

1. Never follow the Herd: Never be a sheep trader. In the market, there will be numerous incidents where people from every walk of life will be buying a particular stock. As an individual only enter a trade where your monetary goals and risk-taking ability are satisfied. What others believe to be profitable might bring loss to you. Therefore always keep your goals and risk-taking ability in mind. Do your own research for the stocks you want to buy. Check the company's past performance to get an idea of how it will perform in the future.

2. Risk management is important: Simplest way to manage huge losses is to put in a stop-loss while you are initially placing the order. Generally, traders consider 2% loss is recoverable and set the stop-loss accordingly. You can change the percentage according to your risk ability. For example, stop-loss for a company whose value is ₹100 is ₹98 if you take a 2% risk. This will ensure that you exit the trade when the price reaches ₹98 and no further losses are incurred.

3. Always Invest/Trade with surplus funds: When making any investment in the markets always make sure you are using money that is sitting ideal. Don’t take out loans and then invest them into the market hoping of making a huge profit and returning the money. This is real life and such chances of making a huge profit are very rare, therefore always be mindful of your money. Also don’t mix emotion into business. Always check your greed/ fear while making trades so that you are making decisions based on logic not based on emotions. 

At the end of the day, the share market is a zero-sum game, you gain someone else losses and vise versa. Profit and loss are the two sides of one coin. In order to make a profit, you need to handle some losses so make it a habit to take these two things as they come.