Lets stop bullshitting and fooling ourselves. First things first
Trading is a zero sum game
Traders try to take money from other traders to stay on the plus side of the game
Now, I have read enough stuff about mind-set, skills suitable for being a trader. My conclusion is, for a trader to stay successful in long run, he/she need to do /have the following two things
First what a trader need to “have” is the character of a contrarian. Contrarianism is some thing that is not easily understood by conformist. Around 80% of the society is made up of conformists rest are contrarians. In trading about 80% of the (serious, full time) traders lose. Contrarianism is about not sucking up to the crowd and not accepting status quo for the sake of being friendly & acceptable in a social setup. A contrarian has balls to be a rebel and go against the tide.
What a trader need to do is do the right thing either by luck, by skill, by experience or by following others. What is right thing, u may write several books on that from “cutting loss” to sticking to “stop loss” to “money management”. But none of this is going to work if the trader blind folds himself and sucks up to the crowd to be successful.
So Be a contrarian", question Status quo" & have balls to stand against crowd.
LOL but how will you decide if you are with the crowd or contrary to it?
As you yourself said that trading is a zero sum game then for every position you make, there’s always a contrary trade happening at the same time. Means for every buyer, there’s a seller, & vice versa.
You just cannot decide which side you are on, crowd or contrarian! Because half the crowd is on either sides.
That’s the fascinating thing about markets. You may comment to everyone , lets stop bullshitting. I don’t think everyone is bullshitting but you surely ended up doing that!
“half the crowd is on either sides-” Wrong
"LOL but how will you decide if you are with the crowd or contrary to it?" - I agree u cant. U may re read my post which reads “Contrarianism is some thing that is not easily understood by conformist”
I assume what @TraderVenk means by having a contrarian approach to trading is having your own trading logic which is profitable when backtested - which would mean entering the position early, allowing your position to run, managing your position size dynamically, managing a loss trade in the best possible way, understanding price movement etc. A majority of the people enter late, exit early, do not understand price movement, add to a losing trade instead of dousing the fire etc.
Yes. Individuality and trading ideas that assumes majority of the crowd is likely making mistake.
For example if the Gujarat win for BJP may cause a spike in markets, A contrarian stands aside and feels “if everyone is long in market, Can it keep going up Where will the fresh buyers come from? it is going to reverse soon”. And construct trading ideas based on this contrarian view.
So basically he watches the crowd to make a mistake
Markets may not react that strongly to Gujarat elections results as it reacted to Uttar pradesh elections results if BJP wins again. Why because Uttar Pradesh WINNING was a very big event. BJP returned to power in U.P after many many years. But Gujarat has been with bjp since long time. And bjp has to fight anti incumbency too alongwith divided Patidars issue over GST.
@Tintin, as per me DISCIPLINE is the most important trait to do well in the Stock Market. However, there are other qualities which are also important as the trader needs a combined package of PATIENCE, POSITIVE ATTITUDE, HARDWORK, PERSEVERANCE, BEING IN THE PRESENT, DECISIVE
I would rate DISCIPLINE as the most important as for each of the above other traits, to do anything we need discipline.
DISCIPLINE to do your homework (analysis).
DISCIPLINE to follow your trading plan.
DISCIPLINE to follow your indicators.
DISCIPLINE to not do anything if that is the best strategy.
etc…
Yes Srini you are right I am just standing opposite bank of a same river. And I brutally confess here that I strongly hate trading, this thing never attracted me.
too good