6 habits of a successful trader in the #stockmarkets
successful people do not attain success by a stroke of luck alone. They have consciously imbibed some good habits which has made them successful. The same logic applies to a trader too..
yes, this is the golden rule of successful trading. You need to observe strict rules and discipline with respect to stop losses, profit booking targets, protecting your capital.
In long run, it is the disciplined trader who wins and not the person who is incredibly intelligent or lucky. Discipline helps you preserve capital and that is at the core of being a successful trader. If you take care of your capital then your Capital will take care of profits.
2. Be optimist keep your expectations realistic
You cannot be a trader if you are not optimist. Even if you’re in a hopeless situation, believe that there is a way out. A trader must always be hopeful that combination of insights & discipline will eventually yield good results
But it is also important to keep your expectations grounded and realistic. There are off days when you gain 5% in a single day and there are days when you lose 5% in a single day. Be realistic because both these events are outliers and are not going to happen frequently.
3. Be patient, persist and learn from your mistakes
A good trader is someone who is willing to continuously learn from mistakes. As a trader it is inevitable that you will make mistakes in trading. The problem arises when you continue to believe that you are right.
Smart traders grasp when they’re wrong & are pragmatic enough to accept & move on. Unlike what other people believe successful trading is not about skills & insights but more about patience & persistence. Once your trading plan is created, you must be patient & keep plugging away
4. Focus on managing risk and protecting capital
This is in a way an extension of the previous point on discipline. A trader’s job is to manage risk. Don’t get obsessed with returns. Remember, you do not control returns. That is something the market controls.
But you definitely can control the risk and that is what you should focus on. If you define your risk per transaction, if you create strong walls around your trading capital and if you always trade with a proper risk-return trade-off, you are likely to see success as a trader.
5. A good trader never panics
There is a popular saying in markets that you must always sell on greed and buy on fear. When you buy when the market is fearful, you will have to witness disruptions and sudden losses. Take that in your stride.
A good trader never panics but sticks to his trading plan and execution discipline. Remember, the quantum of profits in the markets is finite. When you panic you are actually subsidizing the other trader who does not panic.
In that case the profits will accrue to the other trader and the losses will accrue to you. The less you panic in difficult situations, the more likely you are to be successful as a trader.
6. Good traders never gamble, they focus on the odds
Many sceptics of trading often tend to equate trading with gambling, but that is far from the truth. A good trader will always trade on odds that he can control and take risks that can be managed.
When you punt blindly in the markets you are actually gambling. Such individuals can never be good traders. A trader needs to understand the market situation, calculate the odds and then structure the trade. If you approach trading like a gambler, you will end up like a gambler.
Final words :
Nobody is born a good trader. You actually become a good trader by following a certain structure to your trading behaviour.
Try to apply some of these rules in your trading activity. It will go a long way in making you a better trader in the markets
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Life is unpredictable. So, you can experience a temporary money crunch once in a while for various reasons. For instance, it could be due to a home renovation, a wedding in the family, or a medical emergency.
In such cash-strapped situations, the first idea that occurs is to use your savings and liquidate your investments even at a loss. And if that is still not enough, you look for a loan.
This, however, is not your best plan of action. Instead of selling your mutual fund investments, you can get a loan against them. Yes, just as you can pledge other assets such as gold and real-estate for loan, you can get loan against your MutualFund holdings from banks and NBFCs
• Dow Theory is a trading approach developed by Charles Dow who is also known as the father of Technical Analysis. It is still the basis of technical analysis of financial markets.
• The basic idea of Dow Theory is that market price action reflects all available information and the market price movement is comprised of three main trends.
• Most of technical analysis theory today has an origin from ideas proposed by Dow & Edward Jones back in 19th century
Those ideas were published in the Wall Street Journal and are still assimilated by most of the technicians.
• Dow Theory still dominates the far more sophisticated and equipped modern study of technical analysis.
❎Stagflation is a period of rising inflation but falling output and rising unemployment.
❎Stagflation is often a period of falling real incomes as wages struggle to keep up with rising prices.
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❎Stagflation is often caused by a rise in the price of commodities, such as oil. it occurred in the 1970s following the tripling in the price of oil.
❎A degree of stagflation occurred in 2008, following the rise in the price of oil and the start of the global recession.
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❎Stagflation is difficult for policy makers. For example, the Central Bank can increase interest rates to reduce inflation or cut interest rates to reduce unemployment. But, they can’t tackle both inflation and unemployment at the same time.