“A WINNING EDGE” PSYCHOLOGY

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…