When you are a beginner,what you tend to do ,even after reading this entire thread and memmorising every word of it, is to not trust yourself and your method,your modus operandii.
You look at past years' data and apply your strategy that you are comfortable with,and it all just works fantastically.....you are thrilled,excited,you want a bite off the market......You come the next day with renewed vigour and enthusiasm ....you bought some stock at 105,stops at 98,and yep,all systems go.....and then to your horror and disbelief,the stock tanks almost immediately as if it knew that you were getting into it.98 goes by,you don't take it.......95,93,89....ouch,the pain is unbearable.....85....that's it,you take no more.You exit at 85,cursing the market,your brother-in-law,and the guy who gave you the call or tip.
And voila,the stock turns around at 83 and blasts off .......you now have learnt a valuable lesson........never take a loss,always rupee cost average(!!!),your mind says that if you were holding at 105 and added at 85,your average would have been 95 and sitting on profits.
Next time,you rupee cost avg.........you buy at 105,95,85,75,and get out at 70!!!Ouch,more pain than before........and voila,stock blasts off to 100 again.
Now you are sure that the entire world is at cohoots with each other to grab your money............your capital,now halved,you decide to do it the way traders trade.......You buy at 105,with stop loss at 98,and guess what,the stock returns to 102,but the pain is already too huge,your mind is in a state of paranoia,your wife is sitting on your head to quit this cursed profession,you run for cover at 102..........only to see the stock charge off to 150.
You now come to the grand realisation that the market is for gamblers,you will lose either way,everyone who is making something......they are all liars,out to grab other people's money........And with this grand realisation,you are able to sleep the nights.You are not a failure,it's all the fault of everyone else around you,nobody can make any money anyway........blah,blahblah.
LESSON 1:Learn to pin all the blame on to yourself.......not half the blame,not most of the blame,but all the blame.Accept responsibility for your stupidities.Following a set plan of attack,you can conquer the markets.......If you are not able to,something's amiss.Accept blame.Look for your mistakes.Rectify them.Be a success.But first step:Accept responsibility......
LESSON 2:First learn........then set up a Trading Plan.It's vital to have your Plan before you get into the Battle..........There must be set points of entry,exits,adds,position sizing,etc before mkts open........All written down.....When the mkt opens,you no more use your intelligence,your analysis........you just keep the fingers on the Trigger Button,and follow your Strategy.Once in a trade,you are doing nothing but managing Risks.
LESSON 3:There is no thinking,no emoting,no fear,no greed,no hope,no anticipation,no regrets during market hours..............and keeping that tranquil,serene mind,you seek to put in a perfect trade,one after another.
Saint
