THE RIGHT ATTITUDE
The fact that markets are dynamic can be both an inspiration as well as a dejection. Those who thrive in financial markets trading enjoy the challenges which the market presents. The problem with most traders is that they expect the markets to be linear, as they become easier to manage. Markets are a roller coaster ride which offer euphoria on one side and dejection on the other. Those who embrace this fact profit and those who do not think that markets are similar to gambling. The root cause of this problem is an individuals attitude towards markets!
In India, money making is usually associated with hard work and rich people are always looked up as unscrupulous. This is because of the ignorance about money. In this blog post, we will see some aspects about the right attitude to make money.
Markets fluctuate, but you need to remain calm:
Making money in the market requires a lot of emotional strength and this is one area which many traders fail. You need to have an unwavering attitude to stick to your trading plan even in trying times. Not many traders pay attention to this fact. You can improve in this aspect by:
- Having a concrete trading plan, backed by data driven or at least empirically proven strategies with stop losses and targets.
- Reducing your screen time as much as possible.
Obstacles for many, opportunities for a few:
We have often seen the best opportunities come to us when we are in the middle of troubles. Losses are a part of trading, professionals find a way to come out of losses, be technical or financial or emotional. How can we come around about this?
- We should have a positive expectancy model, which can give one of the following outcomes, e.,. A big win, a small win, a breakeven trade or a small loss. If we can keep those big losses away, we can make consistent profits.
- We should revisit our trading journal occasionally to improve our trading plans and strategies.
Be open minded to learn from the markets:
Many traders once they become profitable, exhibit the rookie habit of commanding the markets. Once you become profitable, you get a sense of confidence which very often is overconfidence. This over confidence makes you,
- Skip your trading rules and plan.
- Keep away from money management and risk management by providing a sense of false hope.
You can overcome this by:
- Understanding that past performance results is no guarantee for future returns.
- Knowing that No matter how much you earn, you cannot out grow the markets.
- Embrace change, for it is the only constant in the markets.
Spending time in developing these things as a part of trading attitude. Trading is not just about making money. You should enjoy the process so that you can devote time to these aspects.