The character and temperament of the trader
What is the character of a successful trader? As a rule, independent, persistent and decisive. If we talk about sanguine, phlegmatic, melancholic, choleric, then the best will be phlegmatic, not sanguine, as many might think. Sanguine quickly “break”, and the phlegmatic long and persistently does his job. It is not surprising that after some time he begins to do something.
There is nothing worse than working as a couple or as a team. Especially if you manage small amounts of money. Mutual funds are forced to recruit several traders, but not the fact that their work will be effective. Sometimes mutual funds keep in the staff not only universal traders but also staunch “bears” who are constantly looking for potentially weak stocks and betting on sells. Such work can be very valuable because, during the correction in a bull market, this helps to avoid large losses.
Trading and Health
If you trade in huge volumes, do not be surprised that your health may deteriorate. First of all, the heart and stomach suffer from stress. If you trade in small volumes, you will have small ups and downs of mood. And it will not cause any damage to your health. The greatest speculator knew to the world, Jesse Livermore, suffered from depression and ended his life with suicide. This once again proves that even very capable traders should not trade in huge lots. Some speculators practice auto-training and meditation. Especially popular with traders TM (transcendental meditation). They say it helps to look into the future. Although, this fact is controversial. It is indisputable that with the help of TM, a trader can quickly come to his senses and cheer himself up.
What to do on the stock exchange is not necessary?
Go against the trend
It is especially dangerous to go against the trend in the stock market. The foreign exchange market often moves back and forth. In the stock market, the trend is focused. Sometimes it happens that the stock market “storms”. But the forex market is always troubled. Dissent speculators are against the trend, but this is dangerous, especially in the stock market.
Do not set stop loss
Stop Losses are set by all successful traders. If you want to become successful in this business, then you need to learn how to limit losses. Sometimes traders enter the market with a scanty lot, and then build up their positions. At the same time, they do not put a stop on one transaction – an order, on all others they are reinsured at the breakeven level. Such a technique can be profitable, especially in the stock market.
Many traders use locks – locks during trading. But the meaning of their use is in doubt. Why enter the lock if you can just close the deal? Sometimes locking helps to get out of a difficult situation, but not always. The meaning of Lock is in the psychological plane. If this helps the trader, then he is in error.
Classics of trading advise: do not average! But professional speculators sometimes “sin” this. At least frequent averaging is very dangerous. If you are averaged occasionally, then the likelihood that everything will work out will increase significantly.
This method of trading is spoken by all and sundry. The French mathematician invented this method in order to replay roulette. This technique can only be effective if you have a lot of money. Beginners often get excited when using this trading method, but then they will be disappointed. And here’s why: at some point, he will not have the funds to double his trading volume once again.
Blindly Believe Analysts
Analysts do not know the future. It is possible that some analysts will give the right advice many times in a row. But this does not mean that it will always be so. Experts are also mistaken. One example of a massive mistake was the forecast in 2011 for a rise in the price of gold. Instead of growth in the precious metal market, there was a collapse.
Sometimes traders use many tools in their work. Such an approach to business will not always be effective. If you buy goods, stocks, currencies, this does not mean that you are diversifying correctly. Often, instead of one problem, you can get two or three. Moderate diversification is beneficial, while excessive diversification is harmful. Buying multiple stocks is often helpful. Entering transactions for several currency pairs is usually harmful.
Greed is the main enemy of trading. If you want a lot at once, then you will definitely part with your money in the near future. When trading in large volumes, the chance to earn in the first transaction is approximately 50%. Win in two deals in a row -25%, in three – 12.5%, etc. That is, the chances of success when trading in large lots quickly decrease. If you trade in small volumes, then the probability of success can be turned to your side. If for some reason you went all-in, then go to the end. You might be lucky. But this approach cannot be a trading strategy.
Excessive emotionality is the enemy of speculation. If you are too happy about the gains, then you will be too sad for the losses, and vice versa. Should I be afraid of the market? Of course not. But respect is necessary. If you do not respect him, then he will not respect you either. And then do not be surprised that you do not get anything good. Euphoria is not as dangerous to health as depression, but it can also cause damage to health. You need to rejoice only when you have earned and withdrawn money. But money itself should not rejoice, but how you use it.
The meaning of life and increase deposit
There is nothing good if you get rich, but in other areas of life fail. Human life must be balanced. You must have a happy family, health, a fun life.