🟢 The Trading Mindset

We are emotional retail traders/investors who love to ride an adventurous journey in stock market irrespective of the risk and reward. We know that most of the retail investors are losing money in stocks and we kept searching for the holy grail trading strategy since years, that is not found yet and no guarantee when someone from us may find the sureshot trading system!

The retail investors are having less access to the tradable information, we hear only that news which is made public for a purpose, generally published or forwarded to us because few of the biggies may have already used those information or for the purpose of making financial noise or may be those information are useless!

Whenever we are hearing to any news or report regarding a company, ask yourself "why this information is public" and why such an important news is forwarded to retail investors through electronic, social or public media and how we can use them when everyone is already having the access on it. When an important news/information is available to retail investors, it was already accessible and used by the biggies for their adjustment of positions, this is called edge in trading. Next day when the market will open, every retail investor may start reacting as per the expected outcome of the news and the biggies were knew it, obviously, so that they can use the public reaction for their trading purpose. So, there is a big market risk involved if retail investors use the news/report/information for trading or investing purpose, that was published in public media.

Reading the featuring news in public media will make our mind biased and will not permit us to take independent decisions. Actually such stories are being presented to us in such a manner that most of us will stuck in front of the business channels and we generally lose the power of self-dependency.

Then what is the way out? Should we ignore all news related to market or any stock? Absolutely No!! 

News are of two types, scheduled and unscheduled in manner. I have seen in my last 13 years of trading experience that most of the scheduled events or news such as company reports/quarterly results/broker-house recommendations etc. were already factored in the price, fully or partially. In the case of unscheduled events like #demonetization, was completely surprising for the big institutions too!

We shall use our rational mind to understand the facts of general market practice. When large amount of money is at stake, temptation to manipulate has to be there. Unorganized retail mind tends to behave in line with the mediocrity, as we know the probability of behavior is likely to be concentrated within 2σ usually, it means we can expect 95.40% of the retail mindset is prefixed to behave in very near to the mean, literally we call it a loss. 

Now, logically, if we think and behave just like another trader/investor, it is almost sure that in long term we shall lose money in stock market. Unless we develop our own independent thought process, unless we reject to read news that was forwarded to us for benefit of few biggies, unless we take rational decisions on the basis of a back-tested techniques, surviving in stock market is tough job!

Trading is very easy! Trading is all about trading mindset.

Trading is all about behaving in disciplined manner, maintaining a healthy risk reward and using a well researched systematic trading plan that may fetch you at least 50% accuracy, that's all. All the best!

Above post is personal observation and opinion only, not a recommendation.