EVEN AMATEURS CAN WIN IN THE MARKET

Most of us are amateur traders and investors. Even though we like to think otherwise about ourselves! A professional in any field is one who earns his living from that line of work. While most people in the market may like to think that they earn (their second income?) from the market, the fact remains that they are amateurs.

One of the reasons why people don’t like to call themselves or be labelled as amateurs is owing to the slightly derogatory connotation associated with that word. When somebody wants to belittle another’s work or show themselves to be superior to the other, there is a tendency to label the other’s work as being that of an amateur. But this is not really the truth. The word amateur comes from the Latin word ‘amare’, which means to love. So, really speaking, an amateur is one who is doing something for the love of it! Professional is then one who is doing something for earning from it (and possibly loves doing it also). Seen from that angle, how can any derogatory connotation be ever applied at being called an amateur?

So, is an amateur trader in love with the process of trading? Or is the investor in love with investing? Probably not the case every time. A surer statement would be that they are both in love with the idea of making some money! Not the professional kind- but some rewards for the effort. Market is this wonderful place where it follows a practice of random rewards and also has no consistency in the quantum or frequency of that reward. The same action sometimes gets us a large gain while other times it kicks in with a nominal gain. It can also deliver gains in succession (raising illusions of having ‘got it’) and accompany that with long periods of drought.

So, the feeling of being an amateur emerges from the lack of consistency of the reward or the predictability of it.

But having now entered the market out of love of the process of trading or the attraction of the gains from it, there is no necessity for us to remain in that groove. We need to do some deeper thinking of what we do so that we come to a realization of what drives us, what is really the thing that we love.

The Gita advises us to discover work that you do, not for its utility, but for itself, whether it succeeds or not, whether you are praised for it or not, whether you are loved and rewarded for it or not, whether people know about it and are grateful to you for it or not. This process of detachment can be spoken of but is tough to practice.

A simpler way I have learnt to do this is by simply remaining focuses on being efficient in the normal course of trading and investing. Stop listening to many of the tall stories in the market even if they sound very convincing. The chart will tell you if those stories are really going to play out. Stop making anything related to trading and investing a complicated affair. If you are finding trading difficult, remember that there are always simple improvements waiting to be made.  Mistakes will happen. Can’t beat ourselves up for it. Instead, we have to learn to live with them. When you acknowledge them and start doing something about those mistakes, you will stop compounding them.

To follow up an error with a foolish reaction is to lose twice. Averaging a loser is the cardinal error of many a trader and investor. Overstaying a trade gone-bad is a strategy based on hope. Instead, focus on the reality of where you are right now and estimate, with a calmer mind, what could be your best next action? Often you will find that it is not what you are contemplating on doing! Remember, that a wise response may not erase the impact of the dumb mistakes you made, but it can certainly redeem what will emerge from that point on.

Somewhere along the way, you may also run into a realization that, maybe, you are not really cut out for this trading or investing stuff. At that point, you are better off letting it go. Instead, entrust the work to a professional. Realize that there are many things you do in your life. In all of them you will be an ‘amateur’. It is not necessary though, that you will do all of them well, even if you like or love what you are doing. There is an endless list of obligations and expectations, desires and ambitions, and worries and fears that will always be ready to insert themselves between you and your success.

Being practical, focused, aware and getting skilled in your chosen area are mandatory for success. Training to master some methods, training to develop the right mindset are a must and then the requisite practice to implement those learnings are also mandatory.

There is no short cut. Get these basics right and do them well. It isn’t too difficult either.