Equip yourself to excel in financial trading
Trading in financial markets can be fun if you shed your inhibitions. Nobody likes to lose their hard earned money and the very thought of losing manifests into fear while trading the markets.
This fear either forces a trader to overtrade or quit trading in inancial markets altogether. So it is imperative for a trader to overcome his/her fear.
Why does someone fear while trading?
Fear of losing money arises out of ignorance. People don’t seem to have an idea about the market in general and trading in particular. Remember, Market as a setup would not exist if everyone involved in it were making profits. In a financial market, Someone loss is someone’s gain. People always want to be that someone who gains and they hate losing. In trading, winning and losing are inseparable. People exhibit fear betcause they lack either the technical acumen or the emotional intelligence.
Now how to overcome that fear?
We can overcome the fear of losing by developing the right attitude for trading and acquiring the necessary technical skills required. We can use that fear as motivation to equip ourselves and be successful in trading financial markets. By equipping ourselves, we can get a sense of control over our trades, which in turn will give us confidence.
Understand your limits
Before you decide on entering a trade, it is advisable to know the risk tolerance. Risk tolerance is the rupee amount which you can afford to lose 100% and still not be worried about it. Think about your limits. Be realistic. Say if you earn Rs 10,000 per month, there is absolutely no sense trading with rupees 12,000. Develop saving as a habit. Use a part of your savings for trading. But make sure you keep your risks within the acceptable limits.
There is no trader who has seen only profits in his trading career. Even professionals are no exception. They too make losing trades. But it is just that they understand trading and don’t quit.
They will ensure that they do more profit making trades than loss making ones with their trading knowledge and emotional quotient.
They will analyse the risk reward ratio before entering a trade and this helps them keep their heads afloat. They will look to diversify their trades to mitigate the losses
Ask any professional trader, he would have done a lot of loss making trades and would have learned from these losses. This is what separates those who had fears from those who overcame it. If you are trading, You will face losses and there are no two ways about it. But We should learn to use the mathematics and technical skills to minimise the losses.
The adage ” The best investment you can make is investing in yourself” is still meaningful. If you want to become a successful trader, Invest your time and emotions in understanding the market and trading. You can equip yourself emotionally. This investment can help you acquire confidence in yourself.
Most people lose money in market because they trade according to their whims and fancies and hope to get lucky. They don’t have a trading setup to rely on. They heed to ill advices and end up losing. It is always dvisable to learn to trade in the market, not heeding to whims and hearsays.
There are risk management tools and strategies like stop loss and hedging which can always be used. They limit your losses within the limits in which you are comfortable.
Once you have known your risk tolerance level, equipped yourself technically and emotionally, understood your trading setups, You will get a sense of confidence. Trust yourself and your trading Setup. It will always pay dividends.
As concluding remark. I would advise you to
- Never trade if you don’t know your risk tolerance level. Don’t take a risk beyond your capacity.
- Spend time and money for acquiring the necessary skills and confidence.
- Embrace losses to enjoy trading.