The biggest problem with a trader in the
market is that even after knowing technical analysis, fundamental analysis,
even following an expert (or advisory services) or a big investor he is losing money.
Because of which he keeps on changing strategies, advisory services, following
experts and big investors, and ends up abusing all of them and share market
too. Why is it so?
Do technical and fundamental don’t work?
Do all the experts are wrong all the time?
Do all the big investors lie?
The answer is no, all of the above work well, the problem is not in
the above ways of trading but the problem is in the way it is followed, the
psychology of the trader and money management. People don’t know that every
business every strategy, technical analysis, fundamental analysis, following an
expert (or advisory services) or a big investor, has different phases.
Phase 1: Gives the best result
Phase 2: Gives average results
Phase 3: Gives bad results
Phase 4: Gives the worse results
Note, any phase can come any time,
sequence and duration is not fixed. Now what is our problem that we want only
phase1 all the time, which doesn’t happen in the real world? Now what is the solution,
first of all make sure that your strategy (technical analysis, fundamental
analysis, following an expert (or advisory services) or a big investor), must
allow you to take min 200 trades and trade for at least 3 moths duration. Do
excessive research and back testing on any strategy before actually following
it, if it gives you satisfactory results then you can use it. Once it is done
use only a quarter of your total capital suppose you have 1 lack use only 25k
take out remaining amount now start trading with 25k and take SL of only 1 %
(i.e. 250 Rs) of 25k per trade it means you can lose 100 trade in a row to lose
25k which is very very unlikely it means even if the strategy is not working
you can take 200 to 300 trade before losing 25k.
Don’t change the strategy or don’t stop
trading in between take all the trades just make notes of all the trades and
correction in your strategy. And even after following this discipline you lose
25k which is very unlikely. You can repeat the same procedure by either making
changes in the same strategy or taking another strategy sine you have 3 more
chances of remaining 75k for 9 months.
If anyone follows it I don’t think that he will lose money, as he is
giving himself so many chances to be in the game and learn in the market, and
take min one year duration and min 800 trades to be a successful trader before
blowing up his account.
Please write in the comment box if anyone
has followed such a strategy in the market and lose all his money.
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