6 obstacles that stop you from becoming a successful trader
Have you ever felt that you end up making more losses than profits? Getting nowhere even after analysing charts for what feels like forever? Does your information source seem unreliable at times? Do market trends change as soon as you put your money in?
Well what you are experiencing is very common among most traders. The good news is that there is a simple solution! Just gear up for these hurdles, prepare yourself and jump back into the trading game.
1. Giving in to temptations and fears
Swinging like a pendulum in a market between temptations and fears is a major emotional hurdle that one needs to overcome in order to follow in the footsteps of successful traders. Self-discipline is key to succeeding in any business and trading is no different. Maintaining a balanced outlook towards the trading strategy and approaching wins and losses with a level-head is crucial for long-term success.
2. TMI (Too Much Information)
Given today’s technology and the Internet age traders and investors are surrounded with a lot of information and content from a variety of sources. Sometimes too much information can be detrimental to the trader. One can get sidetracked and lose precious time on unreliable sources and misinformation. This is a major obstacle for most traders.
Traders today are surrounded with many sources of information. Brokers might be feeding you with the next best stock to purchase or family members might be eager to share their opinions about the economy and the markets with you. A successful trader distances herself/himself from the noise and concentrates on the facts at hand. Trading is a business where trusting facts, research and numbers would go a long way in becoming successful.
3. Risking more than you can afford losing
This is a basic rule of trading responsibly. Financial literacy and money management skills are built on the foundation that when taking a risk in investing, one should invest only that part of one’s hard earned money that she or he can afford to lose. Using money from funds allocated for basic goals such as children’s education might be tempting in case you think that you have a hot tip on a stock. However, in the long-run this strategy is not sustainable. Therefore, dipping into your disposable income—the part of your salary that you use to make other purchases that you want but might not need—is a major rule that most successful traders follow.
4. Not adopting technology
The effect of today’s fast-paced world is also reflected on the trading floor—the difference being that the trading floor is now replaced with multiple traders staying glued to their screens tracking market trends using a variety of sophisticated softwares. Many are using platforms provided by their respective brokers. Traders use discount brokers such as Upstox by RKSV Securities that gives a cutting-edge trading platform complete with charting indicators. The Upstox Pro android app also helps traders who adopt new technology to keep track of their trades on-the-go and invest money right away from their smartphones.
Successful traders are those who learn new methods and adopt to the changing demands of the market. They realise that they can tap into the convenience, ease of use and save time while also saving money.
5. Not learning enough
Trading in the stock market requires a lot of prior research and building up of a knowledge base. Sometimes in a hurry to get involved in the market and make profits investors and traders might have a tendency to trade without learning about the stock or the company that they are investing in.
Apart from the share market, a trader needs to stay informed about global business news, politics and other major events in order to make sound, intelligent decisions about where and when to invest and when to trade in capital markets.
A successful trader never stops learning. She or he is committed to a life of studying the markets, economic reports and implementing different strategies.
6. No trading plan or strategy
Just like you won’t enter the deep end of the swimming pool without first learning how to swim—why would you enter stock market without any floaters or a life jacket? Creating a plan and sticking to it is important especially in a volatile business such as trading. Trading platforms offer demo trading and opportunities to test out trading plans prior to placing a trade.
Many a times traders enter the market with a clear vision but somewhere along the way they lose track of their strategy and get caught up in quick-money making schemes thus derailing from their trading plan.
Successful traders achieve profits with years of practice and planning. A trading plan helps you chalk out when you want to enter the market, when you plan to exit and how you plan to manage risk—these plans help you stick to your investing goals and also save money. In order to be a successful trader for the long haul, following your plan is crucial.