Over the past couple of days, I have seen people debating like anything over the possible direction of Nifty. Some wants to see 3250, some wants it to be at 2800. Honestly speaking, I would love to see Nifty going up and making new highs.....But does it mean that my views will always be correct? The answer is NO. There is not a single person in this world who can accurately predict directions in 100% cases. Had it so been, that person would have been the richest person living on earth. Actually many people get egoistic. They start thinking "What will happen to my image if I go wrong.My clients would think that I am a fool." The point is we try to get our heart to work when we actually need to have a control over it. Emotions tend to play an important part in 95% traders analysis and subsequent trades.
In my 2 yrs of trading experience (which is obviously very small), I have seen traders book profits in very small favorable movements, sometimes for even as low as 0.2-1%. But when it comes to booking loses, they will wait and wait for the stop to hit, still wait hoping for a recovery and ultimately book loses of as high as 10-20%. This is applicable in both cases whether its a long or a short trade. Whereas, all traders should do the reverse. They should take 1-2 rs hit and run their winners for 10-20rs. When I speak to my clients, I find that the basic problem is fear and ego. FEAR stops them from running the profits with trails in place and EGO tries to make them convinced that they cannot be wrong. Many of these traders have excellent technical knowledge and is fully aware of the 100 odd indicators that are used. But still hardly any people make any real money though on paper they are truly fantastic. Here I do recommend people to read "Trading in a Zone" by Marc Douglas. He has wonderfully described the psychological imbalance in a trader's mind. One should also read "I'm Ok, You're Ok" by Thomas A Harris where the balance between ego and different circumstances that lead to these egos have been put forward.
Trading as a whole is a mental game. Its a GAME....a SPORT. A game of cricket or say football is not a powerplay as many think of. Its a psychological or mental game...As such any sport is a mental one. One has to win over the prevailing situation. One has to adopt himself with the changing dynamics of the game. Many a times we find that India lost a winning match. Again many a times they have chased 400 runs on the 4th innings of a test. The players were the same. But the control over oneself was different. And thats is the game all about. The same situation is there is the hands of a trader. U have to win over the prevailing situation. In cricket, players practice long hours in net. They try to be technically perfect. But still many a times cannot score runs for many innings at a stretch. Why? A mental imbalance...Fear...Lack of control over inner confidence. Same is applicable in the life of a trader. Its like Bret Lee bowling at you at 150km/hr and you have very a fraction of second to judge your shots. The same happens in trades. The diagonals of a wave come in and market falls or bounces dratically. A technically very sound trader loses or makes no profit. Because he was afraid to take the shot and indecisiveness killed him. He failed to take a decision in that 1 second.....the only difference between a good trader and a loser.
In these lines, I wanted to highlight only thing. That never take a pre-defined shot. Change yourself....change your moves every single moment. Build your strategy but be a dynamic trader and not allow your ego to define your trades. Move out of a bad trade immediately...take a 1-2 rs hit (may be 70% times) but make the winners run and run for max profit (one will get only 30% or few good trades).....
In my 2 yrs of trading experience (which is obviously very small), I have seen traders book profits in very small favorable movements, sometimes for even as low as 0.2-1%. But when it comes to booking loses, they will wait and wait for the stop to hit, still wait hoping for a recovery and ultimately book loses of as high as 10-20%. This is applicable in both cases whether its a long or a short trade. Whereas, all traders should do the reverse. They should take 1-2 rs hit and run their winners for 10-20rs. When I speak to my clients, I find that the basic problem is fear and ego. FEAR stops them from running the profits with trails in place and EGO tries to make them convinced that they cannot be wrong. Many of these traders have excellent technical knowledge and is fully aware of the 100 odd indicators that are used. But still hardly any people make any real money though on paper they are truly fantastic. Here I do recommend people to read "Trading in a Zone" by Marc Douglas. He has wonderfully described the psychological imbalance in a trader's mind. One should also read "I'm Ok, You're Ok" by Thomas A Harris where the balance between ego and different circumstances that lead to these egos have been put forward.
Trading as a whole is a mental game. Its a GAME....a SPORT. A game of cricket or say football is not a powerplay as many think of. Its a psychological or mental game...As such any sport is a mental one. One has to win over the prevailing situation. One has to adopt himself with the changing dynamics of the game. Many a times we find that India lost a winning match. Again many a times they have chased 400 runs on the 4th innings of a test. The players were the same. But the control over oneself was different. And thats is the game all about. The same situation is there is the hands of a trader. U have to win over the prevailing situation. In cricket, players practice long hours in net. They try to be technically perfect. But still many a times cannot score runs for many innings at a stretch. Why? A mental imbalance...Fear...Lack of control over inner confidence. Same is applicable in the life of a trader. Its like Bret Lee bowling at you at 150km/hr and you have very a fraction of second to judge your shots. The same happens in trades. The diagonals of a wave come in and market falls or bounces dratically. A technically very sound trader loses or makes no profit. Because he was afraid to take the shot and indecisiveness killed him. He failed to take a decision in that 1 second.....the only difference between a good trader and a loser.
In these lines, I wanted to highlight only thing. That never take a pre-defined shot. Change yourself....change your moves every single moment. Build your strategy but be a dynamic trader and not allow your ego to define your trades. Move out of a bad trade immediately...take a 1-2 rs hit (may be 70% times) but make the winners run and run for max profit (one will get only 30% or few good trades).....
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