The Market and emotions

We all try to win the market. But it is always elusive. The traders who have controlled their emotions have controlled their earnings in the market. The two emotions which have always ruled market are fear and greed. What is most prominent in the market is the fear of losing money and the greed of making more money.

The market has always punished those who don’t have a trading plan in advance. When you take a position, the market can move in any direction. If you are nervous looking at the loss, your brain will start telling to book the loss. Once you exit from the position, you see the direction reveres for your favour and you could have earned profit if you would be a bit patient and not take the decision at haste.

This is a very common mistake most traders do. The most prevalent emotion in market is repentance. You repent if you exit early at loss. You repent if you don’t exit and it falls a lot to widen your loss. you repent if you book great profit and the price moves towards your favourable direction. So, it’s a common feeling for every trader. It’s not that the successful traders don’t repent. But they strictly follow their plan. They just execute predefined action. They take the loss and profit both with the same spirit.

The market always rewards those who remain disciplined. You can only become disciplined when you know what to do in every anticipated situation. That’s how a plan-based approach always topples the emotion-based approach. If you know the maximum risk you are comfortable to take, you will be much relaxed after taking a position. Mr Warren Buffet rightly said, “Nobody plan to fail but those who fail, they fail to plan,”

Regards,

StockTradingF&OTeam