Sensex touched 33000. Are you Lousy Trader or Lovely Trader? – Check list for you.
Wednesday, November 8, 17
Sensex touched 33000. Are you Lousy Trader
or Lovely Trader? – Check list for you.
Greetings from Hitesh! Market is making new
moves towards up side and it makes the game of investment and speculation very fascinating.
Most guys are ready to jump with the word TIP in the market. They want
something from NOTHTING. This is dangerous attitude. I am sharing a checklist
for you. Just go through it and correct your investment behavior, if you are on
the wrong side.
Playing with out an EDGE:-
I am sure you would have come across a trade
where the shares you sold went up and shares you bought went down. Lousy
traders trade without any edge over other traders.
Lovely traders have a system that gives them
an advantage over other traders. They play only and only when they have an EDGE
with regards to their trading and investment positions.
Buffett always said – “RISK comes from not
knowing what you are doing”. Lousy guys know only TIP and nothing else. They
lack the proper trade set up of LOVELY GUYS.
Always Loser:-
No matter how much money they make during the
trading period when they get out of the market Lousy traders have mounting
losses. In fact, they get out only when the losses become unbearable. Haven’t
you seen a new trader buying and selling in multiple lots in F&0?
Lovely traders make money consistently. In fact,
they follow the strict stop loss levels. Loss of 2-5% in a given trade gives
them 95-98% of capital to trade for the next day.
Random Trades:-
This is the most observed trait of lousy trader.
If somebody tips them and tells that it is a sure shot, they will put their
100% in that company. There is no preset limit or trading strategy with them.
Lovely traders risk preset amounts of money
on each trade. They know the principles of asset allocations.
Risk – Reward Ratio:-
Lousy traders do not understand the odds of
winning in a given trade. Their attitude is “shares will go up when they buy
and shares will go down when they sell”.
Lovely traders understand the risk/reward
ratio in every trade. Due to this they know what to do when the market do not
support their trades.
Risk Management:-
Lousy traders come to the market with no
understanding of their risk of ruin. They can’t imagine that they can get wiped
out.
Lovely traders manage their risk of ruin so
they will always be there for the next day.
Emotions:-
Lousy traders trade with emotion of greed, fear,
hope and euphoria…no trading plan, strategy or risk management. Buy, Hold and
Pray to God that shares prices moves up are the 3 usual steps they follow.
Lovely traders use a trading plan for each
decision. If the plan is not working...they will go back to the starting point
and will not hesitate to close the trade.
Ego Problem:-
Lousy traders have ego problem when they are
winning. The irony comes when they win in a bad trade by stroke of luck or
timings. Winning in bad trade make them believe that they are master in the
market. They start to trade even bigger after that.
Lovely traders surrender to the market. With
each win they become more and more humble. They give credit to the market for
their winning. They know that they can control their losses and profits are the
blessings of the market.
Going out of the way:-
Lousy traders go out of the way to trade - they
will play on margin, dubba trading, oversize trading, etc. For them big trade
means big profit.
Lovely traders trade just big enough to make
a meaningful profit. For them making a meaningful profit and losing a minimum
amount in a trade is a strategy.
No Fall Back:-
Since lousy traders trade randomly, no risk
management and have high ego…they do not have a particular guide, role model or
a consultant. When they lose, they have no fall back to learn from their
mistakes.
Lovely traders have their guide, role model
and consultants. Even today also Mr.Rakesh falls back on Senior Damani or
Mr.Warren Buffett has Mr.Charlie Munger!!
These were some of the points I can make for
you all. Think on them and try to see if you are on the right side or wrong
side. If you are on wrong side, you have a very high RISK of RUIN at 33000
Sensex.
Wish You All A Very Happy Trading.
Hope you enjoyed reading this post. This
article is being sent as a part of investor educations initiatives taken by
Destiny Management Services.
Live With Passion…Invest With Passion.
Hitesh Parikh.
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