” Patience is a virtue which many talk about but few have ”
The most common trait of successful and profitable trader, they are patient and wait for right trading opportunity as per their trading system. Many amateur trading never reach the professional level because they “Over Trade” . Most of newbie traders fell more they trade more money they will make which is grossly incorrect statement. Trading is all about probabilities and its also a negative sum game so more you trade more will be probability of losing money not gaining.
Below we have discussed few ways which will help you to diagnose, if you are victim of Out of Control Trading:
1) Over trading: This is a very common problem for an out of control trader. Over trading can happen when you are trading with more open positions than you can handle at a particular point of time and second is the risking of most of the capital on a single trade (bad position sizing).
2) Trading for adrenaline rush: Many traders look for action, they trades because they cannot resist themselves seeing the trading screen.Most of trades are based on hunches and have no statical edge.The more trades they do the better they feel. Behavioral psychologists refer to this as compulsive behavior and it’s a serious weakness in any profession or activity.
3) Comfort in bigger losses: When I hear a trader feeling comfortable about larger than usual losses that scares me. This comfort tells me that the trader is not thinking rationally as losses should never be tolerated and especially outsized losses.
4) Trading new instruments where you do not have expertise: If a trader deviates at all from the strategy that made him successful, especially when he is a down streak, this concerns me.
5) One sided trading: This sign is correlated to having an opinion on the market. If I see a trader constantly focused on one side, regardless of what the broad market is doing, this person is so focused on being right that nothing else matters. It is so important to be right that even if they make up 20% of what they lost it will seem like a victory to them.
Fact of matter is Out of Control Trader have existed and will exist till the markets are present. There traders feeds the successful traders. So get you act together and try to control the urge to trade without any confirmation from trading system.
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Fellow Friends on How to save from being stopped out. Well i can say Do extensive research on all trading strategies by studying Historical data for past minimum 5 years and see how markets have performed in past bull markets and bear markets.Develop a trading plan and do paper trades in real time where you will be able to identify S.L and tgts. After being confident about a particular chart pattern start real trading with small amount of money and increase it gradually over period of time.
one points i missed out how calculate SL while taking volatility in to account ?
Very very true. Target based trading, Maintaining a trade log book, Shutting off the trading terminal after intra day target is achieved… are some of the oft made suggestions by you that needs to be diligently & religiously followed to prevent overtrade. Hope, sanity prevails !!!
Bramesh Ji ,
Have a query about SL . Should it be set according to % of trading capital or nifty points ? because constraint i am getting is that direction wise my trades are right but it does hit SL & then get bounced or slips .. Mostly i do place trade according to supports or resistances or DMAs or days high or lows . can you let me know how to correct it ? which are better methodologies when it comes to SLs ? Because its frustrating when 2 dad days wipes out entire weeks earnings
Thanks in anticipation .
Very true sirjiiii