Biggest misconception of Retail Trader I found during my trading session
I am a trader so I should trade.
Well, this is the biggest mistake a trader can make. The trader’s job is not to trade but trade right based on trading strategies he has mastered on during the course of time. Trading is a business. A business of making few good trades in a month. In order to achieve this – trader needs to do his job well. Lets discuss few traits a traders needs to achieve else will be thrown out of the market.
Market is always right, no matter how illogical he/she may sound. Never fight with the market. The price on the screen should be the guide, and not the price in your mind. Always have healthy respect for the market and never keep your focus away from the goal – TRADE WELL.
Markets can do crazy things at times and the only self defense a trader can employ – Discipline. Remember, it is the discipline and passion for markets that keeps trader in the market for long run. The moment you lose discipline or passion for markets – you are done.
Trader’s job is to wait for an opportunity patiently . Hence, this is a business of patience (waiting for a good opportunity). Few good trades in a month are all that one needs to make big bucks. Trying to trade every small move (read overtrading) only leads to under performance, frustration and stress. The goal is not to trade often but trade well.
Trader needs a different mindset for this – Patience, and Boredom
Look for Disbelief
Remember, market has a habit of moving in a direction that causes pain to maximum people. When markets move up, it causes pain because it creates a feeling of left out and hence buying frenzy. Similarly, when market goes down, it creates panic of holding up losing position.
Biggest Money is made when market change the trend.
Do not apply your brains
Trade what you see and not what you think. Always approach market with open and opportunistic mindset.
Remember, the disbelief comes from thinking. Please try to see the market as it is and not as you desire. Have a healthy respect for the market and give preference to eyes and discipline than brain.
As a trader, keep your focus on what market is doing and not on what market should be doing. Lots of times, we miss a great opportunity because we are so caged in our thinking that we dismiss real moves.
Your job is to preserve capital
Trading is one business that can give you highs and lows pretty quickly. It is in these highs and lows, traders make stupid mistakes like getting overcautious in lows and throwing all caution to winds in highs. A trader should never get carried away or bogged down by success and failure. Remember, trading is a journey and one bad mistake can wipe you out of business. Hence, as a rule, one should never get carried away; and focus should be on trading capital all the time.
Sometimes, it is better to miss an opportunity than lose capital. The focus is to make money while preserving capital.