What
is your style? Know this for 100% success in stock trading
The importance of a
personal style of trading in success in stock markets/Finding best interaction
model between you and markets/Most important thing you’ll ever need to know to
succeed in trading
This
is perhaps one of the top 3 most important aspects of trading and becoming
consistently successful at it.
Here
we are not talking about the different ‘methods’ of trading such as intraday,
swing trading, and so on. I prefer to call them as ‘methods’. But yes, they
too, do inculcate in the broad topic of ‘your style’ which we are going to
discuss in this topic.
What is your style? What is your style of trading? Yes, Do you
know your style of trading? If the answer is a definite ‘no’ or even a vague ‘no’
or ‘I don’t know’, then you need to very very seriously start contemplating on
this subject if you want to ever succeed in trading.
One
thing we all know and agree is that we all are different, we all look different
and we all think different. Similarly, the stock (or any trading market for that
matter like commodities, forex and so on) market also has a personality. A
personality of many. Don’t get confused yet. The stock market is not a
biological entity or any paranormal entity of ‘one’. The stock market is a
consensus of numerous entities. It consists of millions of entities, so
millions of personalities. The stock market is in constant motion because of
the actions of these millions of entities. Actually we got a bit off the topic.
Understand
this. The stock market is not a profession. Stock trading can be a profession.
But it is unlike a dentist or a doctor where there is more or less standardization
of processes. You want a dental implant or a root canal; same process will be
used by a dentist whether in India or in Australia or almost anywhere in the
world. While not all traders who earn earn by following similar processes. This
is what I call personality or style. The dentist doesn’t have the luxury or
liberty of ‘his style’ but the trader has not just ‘luxury ‘or ‘liberty’ but in
fact ‘necessity’ regarding ‘his style’. He has to have a style of his own.
You
cannot just copy and succeed in this business. This of course, I am saying
presuming you are trading on your own. But if you are following advisory of an
expert or someone else then in that case you simply gotta follow only.
So
what is a style?
A
style includes almost everything. It includes what markets you trade, what kind
of time your devote, what is your approach of profit booking, your concern
about safety and risk management, your position size, when do you trade more or
less or remain on the sidelines, your comfort level with the various market
moves and your reaction to them, are you a short seller or long only trader or
both and so on.
The
gist is that a trading style is about ‘who you are’ and ‘how you mingle with
the markets’. It is about your comfort level of working with the markets. It is
about remaining within the ability of your expertise and continue to trade in
the market without taking unknown, excessive and unwarranted risk. Your style
is all about identifying and taking benefit of ‘that move’ which correlates to
your particular style. You style will decide what kind of technical or non
technical indicators your use or whether you use them at all. Your style
decides your level of activity. Your style is what defines you against the
market, against the all other millions of traders. Everyone has a style. If you
don’t think you don’t have one or don’t know, then try to know or observe your
style. If you still think you don’t have one, then develop one based on some of
the point given above and your personal preferences, your risk taking ability,
you area of expertise, what works for you and what doesn’t work for you.
I
have used word ‘comfort level’ more than once in this chapter. Many people say
to succeed we need to get out of our comfort level, but in stock market it is
inverse. To succeed, remain within your comfort zone. The generic phrase’ get
out of your comfort level’ doesn’t apply here, anyways it’s supposed to mean
differently than what we want to mean it in the context of the topic of this
article. Know this. The more you remain in your comfort zone, the better your
chances of survival in markets, the more you survive in the markets, the more
the chances of you making money doing it.
Now
you get the idea that trading style is a subject of finding your behavior and
the best course of interaction of your whole self as in ‘who you are’ with the
markets. This, you can also call it a harmony.
Trading
style or trading personality is about finding your best tuning with the
markets, its not about finding best technical indicator or best ‘trading method’
(such as swing trading or something else). its goal is to stop trying hard to
deal with the markets and getting into the flow effortlessly. This will set you
in the path of making money consistenly. This is how all successful traders
ever became consistently successful.
We
will write more later on this subject sub topics such as how to know you are
not following a style, how to learn or evolve your style, how to know you are
not comfortable with your style (as a matter of fact, if you are not
comfortable, then its not at all your style) how to get out of a wrong style
and so on.
Meanwhile
if you are not a fulltime trader or want an expert advisor while you become
good at trading, you can check out our website www.meghainvestments.com for various
professional advisory services for traders.
Thanks.
