Do You Trade Market or Your Emotions?

By | August 17, 2016 5:09 pm

Nifty did a one way ride last 6 months from low of 6825 till recent high of 8723. One of the most spectacular rally seen  in recent time. These kinds of rallies (2006/2007/2014) and falls have been coming and will be coming for next many many years. But important thing is were you part of this rally,If yes were you on right side ie. Long side.

Most of traders missed the rally or were shorting the whole rally Very few traders were able to milk this rally. What different they have done.

They had Self Control and Discipline over them.

Cultivating discipline and self-control is vital for consistent and profitable trading. You implement proven trading strategies, over and over, so that across a series of trades, the strategies work enough to produce an overall profit. It’s like taking singles in Cricket to Build a partnership without hitting aggressive shots  so as to accumulate runs during slog overs and getting aggressive during the last stages. The more singles you take, the more likely you will amass a big total. But the winning player is the person who first develops the skill, master it and than excel in his filed, Sachin is considered all time greatest because he was consistent. To a great extent, consistency is the key. If the player uses one approach one time and a different approach at another time, performance is haphazard.

It’s the same for trading. One must trade consistently, following a specific trading plan on each and every single trade. This allows the law of averages to work in your favor, so that across the series of trades, you will make an overall profit. If you follow the plan sometimes and abandon it at other times, you throw off the probabilities. Suppose you used a strategy that had a track record of 60%. Under the best-case scenario, you could only expect to win 60% of the time. But since history doesn’t always repeat itself, it’s likely that you will win less than 60% of the time. If you don’t execute the trading strategy the same way each time, you will decrease your winning odds. And fewer winning trades may mean an overall loss. That’s why discipline and self-control are so important.

With discipline and self-control comes profitability.

Don’t let unjustified wins interfere with your ability to maintain discipline and self-control. Follow your trading plan, and reinforce the idea that if you follow your plan, you will end up with profits in the long run. If you abandon your trading plan, and get an unjustified win, you may feel good in the short term, but you’ll pay a long term price when it comes to your ability to maintain self-control.

So clearly define your trades and your trading plan (discipline), and stick with your trading plan (self-control). The justified wins you receive from following your plan with help you develop an unwavering pattern of disciplined and controlled trading.

      Do You Trade The Market or Your Emotions?

I am been getting so many mails Market has risen almost 1800 points , Its a blind short, Shall i buy OTM PE etc.,

Before think about shorting the market ask yourself why do you want to short the market ? On what basis its just because of your gut feel than your emotions have overpowered you and this can be suicidal for trading .

Develop a system, backtest it, Trust it and than trade like robot.

6 thoughts on “Do You Trade Market or Your Emotions?

  1. jamwalr

    Most of the traders are more busy in predicting the mkt rather than planing how to react to mkt moves..An opinionated trader can seldom make money in the market.No use trying to show extra intelligence in the mkt..Mkt is supreme….only followers of it get rewarded……hence just follow your proved trading strategy and dnt deviate from it…….apka bhi number aayega

  2. Rishi

    //Develop a system, backtest it, Trust it and than trade like robot.//

    beautiful… one should be like robot only when executing their trade plan.


Leave a Reply