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Controlling emotions key in stock trading
The stock market seems lucrative to many. The reason being it seems to be an easy way to make money. But an experienced trader would say that stock market is probably the toughest place to make money
The stock market seems lucrative to many. The reason being it seems to be an easy way to make money. But an experienced trader would say that stock market is probably the toughest place to make money.
One needs to have proper back tested strategy to be consistent in profits over hundreds of trades. One goes through a whole range of emotions, while trading. There is a turbulent phase of emotions. All these emotions take a toll on the emotional health of a trader.
When anyone starts a new business venture, chances of success are less. Not all are successful in business. If there are few people, who have been successful in establishing a restaurant there, more than that who have shut down because of loss. Likewise, there are very few people who are successful in the share market.
Traders rely on technical and fundamental analysis, back tested strategies and tips from financial advisors. Profit or loss doesn't depend upon when you enter and when you exit. You can't control the market, but you can control your emotions.
While trading actively it is your psychology which plays a pivotal role in the success of a trade. It is important to have a mental edge, while trading the markets. A proper trading psychology would give a cutting edge to holistic trading.
It will help staying more focused and calmly take the decisions required to trade like a winner. You will able to trade like a pro when you have the attitude of dealing a positive and negative trade likewise.
Whenever there is a loss instead of being upset or ending up with a revenge trade it is better to accept loss. Loss is always an integral part of trading. Try to assess why the trade went wrong. Make a list of reasons and rectify.
Journaling of daily trading hones trading skills. Trading journal is mandatory for a professional trader. This enables you to have a record of number of successful and unsuccessful trades.
In technical terms, you would have a record of green and red days. Besides this, if you have an assessment of the strategy you used it will increase your win rate in future.
(The author is a homemaker who dabbles in stock market investments in free time)
