Seven Bad Habits of a Trader: Trading Habit #1 – No Patience on Entry


#1

Trading Habit #1 – No Patience on Entry

Anticipating a signal that never comes is common for traders monitoring the market closely and eager to get some money working

Whatever may be your strategy and rules, Allow market to come to at your rules rather than rush to market with a compromise. You may feel like you are missing out on a great opportunity ( traders almost think this way about almost every trade). but patience for following rules of entry is a priceless commodity in trading.

For example, a good buying opportunity arises when a stock breaks from an ascending triangle. Jumping in ahead of the breakout is not an ideal situation because the probability of success buying an ascending triangle is not as good as buying a breakout from one. What causes this mistake? I think a fear of missing out on the maximum amount of profit or the fear of too much risk in buying a stock are the two most common mistakes.

Essentially, the two guiding forces of the stock market are at work here; fear and greed

. By buying early, we can realize a greater profit when the stock does breakout since we will have a lower average cost. Or, by buying early we can reduce risk since a breakout followed by a pull back through our stop will result in a smaller loss as we have a lower average cost. What tends to happen, however, is that the stock does not break out when expected and instead pulls back. This either leads to an unnecessary loss or an opportunity cost of the capital being tied up while other opportunities arise.

The Solution
The simple and obvious solution is to wait for the entry signal, but there are also some things you can do to help yourself stay disciplined. Rather than watch potentially good stocks tick by tick, use an alarm feature to alert you to when they actually make the break. Watching stocks constantly is somewhat hypnotic, and I think the charts can talk you in to making a trade. However, letting the computer watch the stock may help you avoid the stock’s evil trance. Another good solution is to focus on different thoughts when considering a stock. Don’t think about potential profits, don’t think about minimizing losses. Instead, focus in on the desire to execute high probability trades. It takes time to reprogram yourself, so persevere.

All the best
Suresh

Have a great weekend and profitable week ahead! :pray::grinning::metal::raised_hands:


Seven Bad Habits of a Trader: Trading Habit #2 – Selling Too Soon
How to reduce fear while trading?
#2

I have no patience in entry & exit also


#3

Yes, the market is mesmerising like a magician waving his magic wand. But waiting on the side-lines or sitting on your hands :laughing:is an art to develop like entry and exits.


#4

@DA3110… I agree patience required on both entry and exit


#5

@Lakshmikanth_Jadhav Absolutely…One of the most overlooked characters of trading is “Boredom” . so many times we trade out of sheer boredom. To wait patiently is something we need to learn from nature… everything blooms in its own season…:pray:


#6

@SureshG, you put out some very good messages, good for contemplation over the weekend.

Do continue this superb practice. Thank you.

:ok_hand:


#7

@Lakshmikanth_Jadhav…Thank you sir…:pray:


#8

People loose because they enter with technicals but follow emotions to exit. They don’t exit when technicals give signal. They should enter with buy signal and exit with sell. No matter how much stock moves upward…


#9

@mparmar…so true…once you are in the trade…market creates havoc on your emotions and rules go out of the window…discipline required to manage both entry and exit.


#10

@SureshG I have lost a good amount of capital due to following a market noise and not a rule on exit. Finally had to learn it .


#11

@mparmar We all have learned it hard way…market teaches us by stick to stay disciplined…:grinning:


#12

I am Booking Profit In Intraday consistently but Losing Money on day to day Life.
Today I lost Rs.2k Note.
My brand new bike Tyre got burst for no reason.
Day before that My Cellphone stopped working again for no reason.
Facing These type of Financial Loss.


#13

@Lets_Invest…you are just there…you are about to turn a corner …hang on friend… just stay in the game thru saving capital as much as possible…


#14

@Lets_Invest i heard the same things happening for the trading peoples…


#15

Thanks. Hope to see remaining 6 bad habits.

I don’t compromise and I fix tough targets for myself. For examples my target on this 7 bad habits is 100% I,e. 7/7 I m sure I won’t miss even one of them.


#16

How to have control our emotions and patience during entry and exit ??


#17

@TraderVenk :grinning: Thank you Sir!..Now no pressure thinking Venkat is expecting remaining 6 :joy::pray:


#18

@Sarvadaman_banerjee…I guess it comes with experience and practice. Mostly it comes from your ability to trust your own rules and Capital management. When you play each trade with acceptable loss and tight exit management and at the same time as you learn over a period of time that you can make money consistently and losses are part of the game…you tend to relax…


#19

:grinning: I am a contrarian on psychology as well.

Most people believe they can control & overcome their emotions. I can argue endlessly that no one can control their emotions especially fear. Its so basic for survival instinct and engraved in our genes. Psychologically the reason why we can not control our emotions is that we are not “self aware” of emotions the moment it occurs (may be this is too technical that can be understood by reading full book on psychology - for example no one realises that they are laughing, the moment they crack into a laughter after hearing a timely joke or that they are angry the moment they loose everything and go mad in a traffic signal or in a crowded queue. One may act as if they are “laughing” and “angry” with full self awareness but its not about emotions)

You can only manage your emotions. This can be done by understanding your own personality and constant practice. Like trading, everyone need to find their own solution to manage their emotions. Once this is done, you have almost found your own trading strategy, set up and rules on execution.

Basics of managing emotions is not try to stop or counter act. Its about letting it rain… letting it flow…


#20

:rofl::smiley::sweat_smile: