The Big Trader’s Secret

By | May 2, 2013

What is the Ultimate goal of trader who trades Futures/Stocks or Commodity?

The answer is quiet simple Profits. But majority of trades never achive their trading goals and are wiped out of the market. However, there are a few general trading tenets to which all successful traders have subscribed. One such trading tenet is “losing your ego” when trading and  survival in futures trading. One must survive in this challenging arena before one can succeed.  We all know trading futures is all about leverage and even a small trades going wrong can convert to big losses.

Many readers call and ask me what do you think Nifty will do next? My simple answer to them is “I don’t know,” My reasoning is “successful trading is not about getting your prediction right but its about trading on probabilities based on past price history.” The early a trader decides to stop predicting the “next  move of market” more easy will trader will come out of his losing streak.

It’s been reported that people who get into the endeavor of futures trading tend to be of higher-than-average intelligence and have more aggressive personalities – called “Type A” personalities. Having higher-than-average intelligence certainly can be advantageous in any field of endeavor. However, in futures trading, possessing the “Type A” personality can be a disadvantage. Reason: More aggressive and competitive people do not like to lose and do not like to be wrong. It’s a time-proven fact that trading futures is about absorbing numerous losing trades. But that does not mean “Type A” personalities cannot succeed in futures trading. Those with the competitive and aggressive tendencies just need to realize they possess those traits and then manage them properly when trading futures.

Most have heard the simple trading adage, “Cut your losses short and let your winners run.” What this also implies is that during any given year the vast majority of futures traders will see more losing trades than winning trades. Yet, some can still realize profits by getting out of the more numerous losing trades quickly at small losses (by setting tight protective stops), and allow the fewer winners to run and accrue bigger profits.

Just think for a minute about the futures trader who does not want to lose his or her ego. This is the trader who likes to be right and cannot stand to be wrong. In fact, this type of trader will probably go to great lengths just to be proven right. What does this mean when executing trades? It probably means that the trader who hates to be wrong won’t be willing to get out of a losing position at a small loss. Instead, this type of trader may pull a protective stop when in the heat of a trade, or may not use protective stops at all – in the hope that he or she will be proven correct. This type of trader is likely to see a small loser turn into a big loser, and might even get a margin call from his or her broker. And if this type of trader repeats this scenario and keeps absorbing big trading losses, he or she will eventually be forced to exit the endeavor of futures trading. This is also the type of person who would likely blame the markets or the broker for his or her lack of trading success.

Be a humble futures trader. If you are not a humble futures trader now, the markets will eventually make you one – and very likely sooner rather than later. I guarantee it. There are few guarantees in futures trading but this is one that I can make.

 

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3 thoughts on “The Big Trader’s Secret

  1. gauresh

    Vips,

    Humbleness and ego never go together. One can become humble only when he keeps his ego at lower and lower level. If one tries to keep oneself down to the earth and live each moment spontaneously, then he will naturally become humble, accept his mistakes and learn enough therefrom and that make him successful not only in trading but in all field of life.

  2. Vips

    Correction: Its better to be humble person in markets rather than being egoist and loosing entire capital

  3. Vips

    I Agree 100%. It will make everyone humble. Its better to be humble and than loose entire capital being an egoist person in markets

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