One of the biggest reasons for lack of success in the market is the mismatch between what we want to achieve and what we are doing in the market.
And here, I mean the method that is employed by people in their attempt to trade or invest in the market. Let’s pause to examine some of the ways that people do trade in the market.
They use tips. These can come from diverse sources- friends, brokers, newspaper, website, WhatsApp, Telegram, subscription to a service etc. Most of these sources try to be pretty direct in telling the trader what exactly he or she should do. Alongside stops and targets are also specified. Now, let’s see what most people do with these.
Since there are numerous names received through these source points (everyone uses multiple sources, perhaps, for fear of missing out) and hence the commonest problem is bringing one’s own thinking to the received tips. So if, say, 5 tips are received, then the trader discards 3-4 of them and takes only one or max two of the recommendations. Now, there is no process to this rejection and in all probability, the selection of the one traded is purely current sentiment at the time of decision.
Next, very few traders really put in the stop. So, their losses are always bigger than planned.
Third, they usually take profits at the first target or as soon as they see some and the stock starts pulling back. Hence the profits are always smaller than what the trade can actually give.
Fourth, many times prefer to average a losing trade despite there being no such advice or indication. This many times, makes the losses larger.
Finally, they don’t keep any records of the trades and hence are unaware which of their sources is good (if at all) or consistent or shows a better hit rate, better profitability etc. Hence they are unable to repeat a successful method or avoid a poor one.
The tested, proven system part is more of a challenge. People fail to meet these challenges owing to laziness, lack of focus or discipline, ignorance, wrong beliefs etc. In my 40 years of trading I have enjoyed some spectacular runs but have also had equally spectacular flame-outs. After many cycles of these, it has convinced me, to a near certainty that you will not succeed at trading, in the long run, without a tested, proven system that matches your trading style. And, the amount of time and effort you are willing and able to put into it.
There. That is the only secret. There isn’t any other. No magical fundamental formula. No magical technical indicator. No expert tipster. No super advisor. No fantastic WA or TG group. Etc. Just a good method that is suited to your personality and that you can work day in and day out.
Your personality keeps altering slightly thru life. So must your system. But that tweak is much less of a challenge than adopting one in the first place. I designed Neotrader to ensure that deployment of my methods is made a lot easier than just looking at charts. Over time, that became too much of a time consuming activity. Markets today are so much faster. We have to harness technology to speed ourselves in action.
Technology helps us save Time. It helps us focus on the signal by not allowing different subjective interpretations to crop up. Executing through technology will create the discipline.
Once you stop wasting time and start focusing on the main elements, your efficiency shall automatically increase. And, when you bring that efficiency and develop discipline in execution, it will bring in consistency. All of this can, hopefully, create the desired outcome.