What securities taught me?
Before I start, I am still a very novice trader and I still do very minuet trades, so my experiences would be totally different or some maybe wrong most probably. Still I wanted to write this article because during this last 5 months, I have learnt so many invaluable lessons that I was never taught or even followed so disciplined.
Most of us enter into the securities market in hope of making some quick bucks, I entered in this game for the same to make some quick bucks and gradually my views changed about the game. First lesson I learned from the market is taking control over your own emotions.
- Taking control of your own emotions
It might seem totally out of the context, what does emotions has to do with the securities market, well it has everything to do with it. Learning to trade and better investment strategies is just one part of the game, the major part of the game is one’s emotion. Initially I have lost many trades obviously small ones, just because either greed or fear took over. From my experience I felt that markets rule over specially these two emotions, fear and greed, I used to thought I have good control over my emotions and I am not that greedy and I am too cautious. But when you enter in the arena, everything just goes away, and when you see your daily P/L going into red or in green zone, eventually the emotion will take over. I won’t say I am still expert in this, but if I look back from the day I started and today, my trades have performed better and I feel less tensed while losing money, still in some trades well greed isn’t a problem anymore but fear still takes over me sometimes. The trick to win the market is to get a hold on your emotions and finding a good balance. Most of us thinks market is all about making money, I think of it the other way around, it’s more about not losing money. Capital preservation is must.
- Know before you enter
One of the lessons I learnt much after I started it, is that one should know what he/she is getting into before getting into. Most like me enter into a trade by looking a red or green candles, and then after that we decide where should we cancel the trade and take profit or cut our losses. I use to do this and during the process I have lost many trades. One should know before entering into a trade, where should he cut his losses and will take his profit out, even though market is going in your direction it doesn’t matter. For an example, today I shorted 100 shares of BPCL at 442.1, it was going down everything was going in my favor at 438.6, I decided to take my profit out. There was a major pivot there, before this the stock was breaking all the pivots and moving in a smooth downward direction. For a moment I thought of taking more profit out of it, and for a moment market did consolidated at that point. But I just threw out my thoughts and stuck to my original setup, after my position was covered. I turned off my laptop and started watching netflix. Surprisingly after the market closed, I decided to look at the stock action again, the stock did went down about .5 or 1 down but after that there was a huge spike in the stock and eventually it closed at 449, which if I have changed my setup or let my greed take over me, I could have made less profit or even made some losses.
- Market is always right
Security markets are the best playground to test your theories about human psychology. Today in the above example, during noon there was a news that there were some drone attacks in Saudi in one of the world’s biggest oil refineries, this obviously shot up the crude prices by about $50 in turn which pushed the Asian market further down. But before I took this trade in BPCL or during the trade I didn’t knew about this, honestly I am not that active in news stuff, but now I think I should. All I am saying is, I didn’t knew about any of this news still I made a profit, because I was just following the market and its price action. Market digest all the bad or good news in it’s price action. Earlier I use to think that market is so fucking mad, are all the traders went mad why is market shooting up so high, well that’s what we call bull. But I was always hoping I should come down or crash but it never happened, the thing is if you’re in the market as a trader then market is always right, it doesn’t gives a rat’s ass about what’s happening in the world, everything will be digested into the price action. All you have to do is to trust the market and read it.
- Money isn’t real
This is kinda off, but what I mean by this is. Since my childhood, I had a totally different view towards money, but now I look at money in totally different way. Honestly I look at them as my employees, and as a CEO it’s my job to use them in good ways to make more employees and hence the compounding effect.
