A question came up recently from one of the subscribers about trading, to which I responded with a statement that implied that the "game is rigged". Now I wanted to take a little time to elaborate.
When I said: "game is rigged", I meant it in reference to the fact that a better capitalized trader would be more comfortable trading without the fear of (inevitable) losses.
On the other hand, a poorly capitalized trader usually feels insecure due to multiple life factors. For example from family and work stresses.
That is OK!
We must be aware of our emotions and our thinking while trading. If we feel inadequate, then we must defeat this issue first in ourselves and then come back to trading.
I freely admit that stock trading is definitely not for everyone. There are a lot of emotions involved, especially if there is a losing streak. I had losing streaks of around 10 consecutive transactions. From personal experience, I can tell you that it is very hard psychologically to put on a next trade after such a streak.
This is one of the reasons why I continue to advocate that beginners take smaller positions with wider stops - it improves success rate. With tight stops, success rate could be around 30-50%. With wider stops (and smaller positions) success rate can go up above 70%. My current overall success rate on my closed transactions, is a little over 70% counting the last 100 transactions. I still have a bunch of open profitable positions, so I can't technically count them.
Negative emotions will impact trading, because the trader will feel pressure/frustration to force their opinion on the market. This is a big "no-no" in trading.
Positive emotions will also impact trading, because the trader will feel elated, and more prone to take unnecessary risks, and thus trade poorly.
Some sort of a balance is required.
I personally do a lot of yoga/qi gong/meditation/prayer to combat trading stress, and strongly recommend these practices to, well ... everyone! :)
Best Regards,
-Alexander Berger
(Los Gatos, CA, December 2017)
When I said: "game is rigged", I meant it in reference to the fact that a better capitalized trader would be more comfortable trading without the fear of (inevitable) losses.
On the other hand, a poorly capitalized trader usually feels insecure due to multiple life factors. For example from family and work stresses.
That is OK!
We must be aware of our emotions and our thinking while trading. If we feel inadequate, then we must defeat this issue first in ourselves and then come back to trading.
I freely admit that stock trading is definitely not for everyone. There are a lot of emotions involved, especially if there is a losing streak. I had losing streaks of around 10 consecutive transactions. From personal experience, I can tell you that it is very hard psychologically to put on a next trade after such a streak.
This is one of the reasons why I continue to advocate that beginners take smaller positions with wider stops - it improves success rate. With tight stops, success rate could be around 30-50%. With wider stops (and smaller positions) success rate can go up above 70%. My current overall success rate on my closed transactions, is a little over 70% counting the last 100 transactions. I still have a bunch of open profitable positions, so I can't technically count them.
Negative emotions will impact trading, because the trader will feel pressure/frustration to force their opinion on the market. This is a big "no-no" in trading.
Positive emotions will also impact trading, because the trader will feel elated, and more prone to take unnecessary risks, and thus trade poorly.
Some sort of a balance is required.
I personally do a lot of yoga/qi gong/meditation/prayer to combat trading stress, and strongly recommend these practices to, well ... everyone! :)
Best Regards,
-Alexander Berger
(Los Gatos, CA, December 2017)
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