To be successful in trading, you need to perform all the tasks that are a part of a successful mindset. We present to you in this article some of the main tasks that every trader needs to do. Successful traders learn these tasks through trial and error. Tasks at the same time may vary for different traders as they may deal with different time frames.
Trading deals with your performance. This performance is measured in terms of profit and loss. Your track record cannot be hidden at any cost. You play a major role in determining your performance. The best way to do this is to analyse yourself subconsciously. By doing this, you will be one step ahead of all other traders. This is possible only through self-analysis. Self-analysis helps you to distinguish between trades that are actually hard vs the ones you just feel they are hard.
You can do self-analysis in the following method. When you begin your day, start with 30 seconds of meditation. Try to go within yourself and find out how you are feeling that day. Rate yourself on a scale between 1 to 8. With 1 as feeling the worst, 8 as feeling the best and 4 to 5 is average.
Do this exercise for a month and then compare this result with your trading performance. You will be in a position to decide whether it is worth trading or not. Make a rule that you will not trade until your rating level is above the minimum level. The rating should not also be too high, as this can affect your trading. At this level, overconfidence is high, and you think you are the owner of the market. The market, in this case, can give you hard lessons.
If you practice self-analysis regularly, it can create an immense difference in your trading. You will be amazed b your trading performance.
Imagine a situation where you find a trade that you think has low risk, and hence, you want to open a position. You have two choices; either you could chase the market by entering at any price, or you could wait for the best possible price. Now we could say, “Stalking” means to get the possible price. Thus, stalking is also a form of risk control.
Stalking is, trying to get all odds in your favour by taking into account the smallest possible time frame. This means you need to be focused on trying to get the best price that day through patience. The only way you could do this is by getting into the flow of the market. The market has a lot of cues to give if you are paying attention to each of them. You need to learn to understand and interpret those signals.
Action is the easiest task of trading. It just takes an instant. But to do it efficiently it requires you to be aggressive, bold and courageous. You need to be quick enough to do it with accuracy. There is a clear distinction between accuracy and quickness. If you fail in any of these, you will miss the opportunity or might result in a loss.
The action also involves being committed to a position. If you have taken a trade, then you must know its consequences. You should be ready to accept its maximum loss and potential profit. At the time of action, you should not be thinking of consequences as that should have already been done. You take a prompt and courageous decision in the action stage.
Action should always go hand in hand with accuracy. If you don’t do this correctly, then you will fall prey to somebody else. To obtain accuracy, it should be carefully practised and rehearsed in advance.
You should be fast enough in switching your tasks from “stalking” to “action”. The hard fact is that many traders cannot make this shift. They either feel restless and energised, or they are cautious and wait to take action. This results in two situations; first one being, they increase their risk by jumping on the trade. The second one is that they just wait to get the best possible trade and end up getting nothing.
After you have executed your trade, you need to monitor your trade from beginning till the end. The task of monitoring can vary depending on the time frame of the trade. If trading intraday, then you will be performing the tasks of stalking, monitoring, and taking profits in a circular fashion. You will have to do these entire tasks, one after the other. It requires the shift in mental states constantly. It is also for this reason that many people lose money day trading.
Monitoring involves two sub-tasks. This is mostly for the longer time frame traders. The first sub-task is detailed monitoring. Here, you are following the pulse of the market, getting ready to take any necessary action. The second sub-task is overview monitoring. It involves being in a “side-watcher” position after the market has moved comfortably in your favour in the long term.
This task is similar to the “action” task. This is more specific to the action of “abort” and “take profits”. Successful traders have four major beliefs about taking profits.
- The first belief is that if the market conditions are changing so dramatically that your expectations are no longer holding, you need to take your profits. Avoid being greedy.
- The second scenario of taking profit is when the market reaches your pre-defined profit
- The third belief is that if the market suddenly becomes very volatile, you need to exit your position without thinking much.
- The fourth belief is mostly applicable during bear markets as bear markets offer a climactic portion of the move to the end. If such a move occurs, you should take profits immediately.