The best investors in the world have more of an edge in psychology than in finance
Looking through the lens of my past trading experiences, this could not be more true. My major losses in stock trading have always stemmed from a lapse in emotional discipline.
Why most traders fail and only a handful win is not because of lack of information nor is it due to the market being rigged. No. It was simply failing to restrain emotions and impulsively buying a stock without a sound plan. When you throw proper market timing out the window, you are inviting chaos into your portfolio.
The market cannot be predicted in the short term, it can only be navigated. Manage risk consistently and the profits will naturally come.
Blind trading is very prevalent and is the usual culprit for most of the negative dogma in the stock market.
People like to rationalize and draw up weird astronomical stories on why their stock is the next big winner. Without any sound technical or fundamental reason, it is hard to bet on such stories. Market sentiment is always the main driver of price action. If the market won't buy it then it won't move at all.
Traders who seek thrill through “hyped” stocks often get burned. This is the stark opposite of how winners approach the market. If you look at the strategies of profitable traders, it is oftentimes systematic and boring. The trade plan is followed with precision and exact entries and exits are respected.
Learn before you earn
If you want sustainable success in the stock market then it is through practicing proper trade executions, risk management, stock screening, back testing, research and emotional discipline where you will climb the ladder to wealth. It starts with the little things. No shortcuts!
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