Monday, June 26, 2006

Matured Trader



Successful traders are sharp, curious, and unassuming people. Most
have been through losing periods. They graduated from the school of
hard knocks, and that experience helped smooth their rough edges.
Successful traders are self-assured but never arrogant. People who survive
in the markets remain alert. They trust their skills and trading methods,
but keep their eyes and ears open for new developments. Confident
and attentive, calm and flexible, successful traders are fun to be with.
Successful traders are often unconventional people, and some are
very eccentric. When they mix with others, they often break social rules.
The markets are set up for the majority to lose money, and a small group
of winners marches to a different drummer, in and out of the markets.
Markets consist of huge crowds of people watching the same trading
vehicles, mesmerized by upticks and downticks. Think of a crowd
at a concert or in a movie theater. When the show begins, the crowd
gets emotionally in gear and develops an amorphous but powerful
mass mind, laughing or weeping together. A mass mind also emerges
in the markets, only here it is more malignant. Instead of laughing or
weeping, the crowd seeks each trader’s private psychological weakness
and hits him in that spot.
Markets seduce greedy traders into buying positions that are too
large for their accounts and then destroy them with a reaction they cannot
afford to sit out. They shake fearful traders out of winning trades
with brief countertrend spikes before embarking on runaway moves.
Lazy traders are the favorite victims of the market, which keeps throwing
new tricks at the unprepared. Whatever your psychological flaws
and fears, whatever your inner demons, whatever your hidden weaknesses
and obsessions, the market will seek them out, find them, and
use them against you, like a skilled wrestler uses his opponent’s own
weight to toss him to the ground.
Successful traders have outgrown or overcome their inner demons.
Instead of being tossed by the markets, they maintain their own balance
and scan for chinks in the crowd’s armor, so that they can toss
the market for a change. They may appear eccentric, but when it
comes to trading they are much healthier than the crowd.
Being a trader is a journey of self-discovery. Trade long enough, and
you will face all your psychological handicaps—anxiety, greed, fear,
anger, and sloth. Remember, you’re not in the markets for psychotherapy;
self-discovery is a byproduct, not the goal of trading. The primary
goal of a successful trader is to accumulate equity. Healthy trading
boils down to two questions you need to ask in every trade: “What is
my profit target?” and “How will I protect my capital?”
A good trader accepts full responsibility for the outcome of every
trade. You cannot blame others for taking your money. You have to
improve your trading plans and methods of money management. It will
take time, and it will take discipline.

5 comments:

bliss said...

my dear rishiji
your thougts are piercing my mind and i am thankful to you for educating me, it is very nice of you to take time to share and care. i respect you , i accept you as you are
cheers
easwaran
bbliss47@yahoo.co.in

bliss said...

rishiji,
more articles on money management please, thanks a lot, you have made this morning wonderful, thanks and keep posting.
cheers
easwaran
bbliss47@yahoo.co.in

Anonymous said...

rishi very nice article
i wish i had read ur articl in the morng great work congrats
hitting the nail on the spot
like a footballers tackle

Anonymous said...

really good article,
even though I think Im al lazy trader

Jai

Anonymous said...

Sir, successful traders possessing the quality of being unassuming is sometimes a contradiction in terms. Just take a look at those analysts on CNBC.

Post a Comment