I am a trader....so I should trade. Well, this is the biggest mistake a trader can make. The trader's job is not to trade....but trade well. There is a big difference between the two. Trading is a business. A business of making few good trades in a month. In order to achieve this - trader needs to do his job well. To do the job well, he/she should be aware of his/her job description.
Job Description # 1: Be an Opportunity Watcher. Opportunity does not travel on any schedule; you have to watch for it Trader's job is to wait for an opportunity that can deliver explosive profits. Hence, this is a business of patience (waiting for a good opportunity). Few good trades in a month are all that one needs to make big bucks. Trying to trade every small move (read overtrading) only leads to underperformance, frustration and stress. The goal is not to trade often but trade well. Trader needs a different mindset for this - Patience, and Boredom
Job Description # 2: Look for Disbelief. I love when somebody says - This cannot happen. Remember, market has a habit of moving in a direction that causes pain to maximum people. When markets move up, it causes pain because it creates a feeling of left out and hence buying frenzy. Similarly, when market goes down, it creates panic of holding up losing position. The explosive profit comes when there is strong disbelief; and that disbelief results in large moves. The trader's job is to wait for a disbelief opportunity. A good trade should fulfill following conditions - 1. Technical Trigger; 2. Element of disbelief and 3. Trigger response - swift and sudden - there should be some shock element.
Job Description # 3: Do not apply your brains. Remember, Trader is like a watchman. He is paid to watch and not think. So, don't apply your brains when you are not supposed to. Trade what you see and not what you think. Always approach market with open and opportunistic mindset. Remember, the disbelief comes from thinking. Please try to see the market as it is and not as you desire. Have a healthy respect for the market and give preference to eyes and discipline than brain. As a trader, keep your focus on what market is doing and not on what market should be doing. Lots of times, we miss a great opportunity because we are so caged in our thinking that we dismiss real moves.
Job Description # 4: Your job is to preserve capital. Trading is one business that can give you highs and lows pretty quickly. It is in these highs and lows, traders make stupid mistakes like getting overcautious in lows and throwing all caution to winds in highs. A trader should never get carried away or bogged down by success and failure. Remember, trading is a journey and one bad mistake can wipe you out of business. Hence, as a rule, one should never get carried away; and focus should be on trading capital all the time. Sometimes, it is better to miss an opportunity than lose capital. The focus is to make money while preserving capital.
Job Description # 5: Be a good employee and be disciplined. Market (Read boss) is always right, no matter how illogical he/she may sound. Never fight with the market. The price on the screen should be the guide, and not the price in your mind. Always have healthy respect for the market and never keep your focus away from the goal - TRADE WELL. Markets can do crazy things at times and the only self defense a trader can employ - Discipline. Remember, it is the discipline and passion for markets that keeps trader in the market for long run. The moment you lose discipline or passion for markets - you are done.
Job Description # 1: Be an Opportunity Watcher. Opportunity does not travel on any schedule; you have to watch for it Trader's job is to wait for an opportunity that can deliver explosive profits. Hence, this is a business of patience (waiting for a good opportunity). Few good trades in a month are all that one needs to make big bucks. Trying to trade every small move (read overtrading) only leads to underperformance, frustration and stress. The goal is not to trade often but trade well. Trader needs a different mindset for this - Patience, and Boredom
Job Description # 2: Look for Disbelief. I love when somebody says - This cannot happen. Remember, market has a habit of moving in a direction that causes pain to maximum people. When markets move up, it causes pain because it creates a feeling of left out and hence buying frenzy. Similarly, when market goes down, it creates panic of holding up losing position. The explosive profit comes when there is strong disbelief; and that disbelief results in large moves. The trader's job is to wait for a disbelief opportunity. A good trade should fulfill following conditions - 1. Technical Trigger; 2. Element of disbelief and 3. Trigger response - swift and sudden - there should be some shock element.
Job Description # 3: Do not apply your brains. Remember, Trader is like a watchman. He is paid to watch and not think. So, don't apply your brains when you are not supposed to. Trade what you see and not what you think. Always approach market with open and opportunistic mindset. Remember, the disbelief comes from thinking. Please try to see the market as it is and not as you desire. Have a healthy respect for the market and give preference to eyes and discipline than brain. As a trader, keep your focus on what market is doing and not on what market should be doing. Lots of times, we miss a great opportunity because we are so caged in our thinking that we dismiss real moves.
Job Description # 4: Your job is to preserve capital. Trading is one business that can give you highs and lows pretty quickly. It is in these highs and lows, traders make stupid mistakes like getting overcautious in lows and throwing all caution to winds in highs. A trader should never get carried away or bogged down by success and failure. Remember, trading is a journey and one bad mistake can wipe you out of business. Hence, as a rule, one should never get carried away; and focus should be on trading capital all the time. Sometimes, it is better to miss an opportunity than lose capital. The focus is to make money while preserving capital.
Job Description # 5: Be a good employee and be disciplined. Market (Read boss) is always right, no matter how illogical he/she may sound. Never fight with the market. The price on the screen should be the guide, and not the price in your mind. Always have healthy respect for the market and never keep your focus away from the goal - TRADE WELL. Markets can do crazy things at times and the only self defense a trader can employ - Discipline. Remember, it is the discipline and passion for markets that keeps trader in the market for long run. The moment you lose discipline or passion for markets - you are done.