Success Strategy – Success
in stock markets involves three elements. Almost all traders commit
three basic mistakes which are explained below.
- Trend - First and foremost is the identification
of the trend, which we do it for you with specific entry and
exits. But many traders go against the trend as they sell on
the resistance on higher levels, thinking that market would come
down from the resistance levels. In uptrends, all resistances
would be broken.
Similarly, many traders try to buy on the supports, expecting that
market would go up from the support levels. In downtrends all supports
would be broken.
- Risk control – The single most element
of success in stock markets, is to keep the losses to the lowest
minimum.
Hence it is important that quantity at each time should be taken to
an extent that incase of a loss, there should be never be more than
3% of loss of the entire invested capital.
But many traders risk highly in a single trade, thinking that this
particular trade would be a big winner, and sometimes resulting in
a big loss that erodes a huge amount of capital in few trades only.
A few trades of big losses is enough, to make the trader devastated.
Hence traders have a keep a strict stoploss and control the losses
to the lowest.
- Discipline – It is the ability to strictly
follow the rules of entry and exit. Traders should have the mental
stamina and mental strength to execute and follow all the trades.
Many traders enter in few selected random trades and stake in the maximum.
Many traders do not run the entire trend and do not catch big profits,
which is the sole factor of successful trading.
Most traders either make late entry or make early exit in profitable
trades which is both due to fear. Similarly most traders make late
exit in a loosing trade, which is because of hope that market would
move in their anticipated direction.
Similarly most traders make late exit in a profitable trade, missing
out portion of a profits, which is because of greed of making more
money.
Hence a disciplined approach to trading, consistently following all
the signals without any personal beliefs is needed for success.
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