Its an well known adage in Stock market “90% of trader lose money, 5% are at breakeven and only 5% are highly profitable trader”.
So trading seems to be highly profitable profession if you are in top 5% but its a loss making profession for remaing 95%.
So let me discuss few characteristic of Bad traders
- A Bad trader will always be a forecaster of market tops and bottom, You will speculate that market cannot go above the certain level or cannot go down below certain level. You will involve bias in your trading and when market starts going against you , you will talk of all kind of conspiracy theories market is rigged, Operator are making stop losses hit etc.
“Don’t try to buy at the bottom and sell at the top. It can’t be done except by liars.” -Bernard Baruch
- A sure way of analyzing yourself is Ask yourself the following question, the recent run up Nifty saw from 5970 to 6194 did u make money or lost money fighting the trend. Do not give excuse to yourself, just answer Yes or NO. if you lost money means you are a BAD trader and need to improve on your trading.
“Cardinal Rule #1 is to sell short only during what you believe is a developing bear market, not a bull market.” -William O’Neil
- You are bad trader if you have no risk management and few bad trades can ruin your trading account.
By risking 1%, I am indifferent to any individual trade. Keeping your risk small and constant is absolutely critical.”Larry Hite
“Trading is not about being right. It is about putting money into the account. That’s it. Everything else is secondary.” -Ned Davis
- You are bad traders if your keep shorting the leaders and keep buying the the weaker stocks ie. stock in downtrend. Many traders are shorting S&P 500 or Nikkie Japanese Stocks thinking they are overvalued but its rule of trading to be with leaders till you get reversal sign.
“What seems too high in price and risky to the majority usually goes higher and what seems low and cheap usually goes lower.” -William O’Neil
If you have the above characteristic of BAD trader and you have been repeating from past many years its high time to stop trading, Either learn the tricks of trade via reading books or get yourself a mentor who can guide you. Stop losing your hard earned money.