STOCK-MARKET TRADERS--
DEVELOP “A WINNING EDGE” PSYCHOLOGY
Stock Trading
demands fundamental understanding of the stock valuations, future prospects and
never the less stock behaviour relates to news and corporate developments.
Stock market Traders shall have the necessary financial back-up, right
associations to understand the movements with precision & care, more over
traders shall develop psychologically matured, emotionally balanced, analytically
strong mind and disciplined in judgement which we often find HARD with the
amateur traders.
Afresh blood of
INVESTOR community come to markets on regular basis, and many novice investors
get converted to Day-Traders for early-quick bucks, more than that a KICK and
Excitement. The amateur Traders, think trading is an easy job, get trapped in
the psychological compulsive state, loose control of rational thinking and
suffer losses due to lack of understanding about the market operations. The
stock-market play is always a two way game. But most traders believe just a
BUY&SELL. These Traders seldom recognise the basic fact that
every BUY from their end is corroborated by some others SELL side position and
vice-versa.
Most of the times,
the Day traders believe as if they are making a winning trade as small profits
are reflected in their positions due to the market fluctuations. In fact, the
day traders fail to understand the actual Trend, because the small moves are
perceived as TREND and more positions built over that, as if right. The move to
eliminate day traders/jobs shall never be taken as granted as TREND, whereas
seasoned market makers/market operators generate such a false swing move to
eliminate the amateur weak traders in the opposite direction of the main trend
to see the stop-loss orders get triggered. Trends sustain for longer period
usually than the fluctuations. The fluctuations of PUSH & PULL due to the
urge to garner VOLUME, market operators generate a minor move in the direction
of TREND or against. This happens normally when stocks in a Trading Zone, with
well-defined boundaries.
No doubt, traders
are the volume creators, provide DEPTH to the markets. The amateur traders who
are hyper active in their decision are making process seldom find time to cross
check the rationale, enters the market to create a position on the buy side or
on the sell side, and get struck to that thought process. These Traders tend to
behave erratically, because initiated some positions, don’t hesitate to add more
even if the position is at loss, and presume that averaging can turn the table.
The similar behavioural pattern compels these traders to go for wild coverings
that force to accept huge losses. Many a times, hear the complaining sympathy
seeking statements like “when my positions are cleared/stoploss hit, the
markets took a U-turn”.
Day Traders enjoy
the ecstasy, get involved in the PROFIT-LOSS drama of excitement that keeps
tense mental state, and fail to evaluate the strength of winning trades.
Similarly when losing. Either, Greed for Profits and FEAR of Loss generate
impulsive heartbeat, turbulent emotions encircle the traders mind, generate
confusion while making a judicious decision making, and end up in frustration.
Traders has to
accept the very fact that, they have to understand the behaviour of the stock
market moves but not the Markets. A seasoned trader can easily identify these
moves and their nature strength, can generate good profits, whereas the
amateurs be they Traders or Investors, always emotionally take a decision and
challenges themselves to prove their ability to take right
decisions, prefers to Buy at the Top edge and Sell at the Bottom.
The problems with these Compulsive, emotionally imbalanced traders is that they
DEMAND the TREND, always look at the markets with an influenced mind set,
thinking as if they are insurmountable and a pre-defined blind approach. Here,
I am suggesting to understand the difference between a PLANNED & STRATEGIC
APPROACH and a pre-determined adamant approach.
In my next article,
will try to analyse the PILLARS of Stock Markets…
