'Shades' of 'Trades' - color of the marketIn this color season let's have an insight into how the market plays 'Holi' with traders with its binary colors.
The above line sounds fascinating but it's not let me elaborate a bit more. Yes, the market plays with colors with traders
but the market uses only binary colors. Many of you may think of white and black as binary colors, but this is not the case here.
The market only uses two primary colors green and red to play with traders but we play with colors only on 'Holi' it seems that markets are very fond of playing with colors so it does probably every trading day it either colors the trader's position page with the green of red.
Though we have only two colors in markets which can be divided into four shades which are the following:-
-> Light Green - symbolizes a small profit
-> Dark Green - symbolizes a big profit ( Trader's Favorite )
-> Light Red - symbolizes a small loss
-> Dark Red - symbolizes a big loss ( Hazardous to account )
In this article let's dive into the depth of these colors and the reason for incurring such colors on your position page.
-->How to get light green color -- Aimed for steady and regular profits .
-> Trader can incur this only if they are consistent and aims for regular profit cause markets aren't trending every day.
-> Discipline is the key to consistency.
I think many of you have heard of the story of sage Vishwamitra who was meditating for a purpose and Menka was used to break the meditation and misguide him from his path. The same is the case of markets if you are in the market to generate regular profits then you must be disciplined as markets have negative behavior of creating illusions to trap the traders just like Menka .
-> I suggest developing a trading system or set of rules on which you are going to take the trade if you want to generate regular and steady profits cause if the system is profitable you will also be profitable. Don't rely on price action on an intraday basis unless you're a champ in the same.
-->How to get dark green color -- Aimed for sporadic and occasional profits.
-> Though everyone wants profits it's not obvious as said earlier markets aren't trending every day.
-> But if you are keen on watching market movements, you could probably catch these sporadic days and generate
big profits.
-> Fear should reside out to ride big profits.
I think why many of us aren't able to ride big profits because of the opulence of loss that has developed fear in our minds due to which we try to book profits early without getting any sign of weakness in our trades. Our mindset says to us "Something is better than nothing".
-> To overcome this fear I suggest backtesting your trades which can help you in gaining self-confidence if anyhow you can develop faith in yourself then fear naturally resides.
-->Reasons to get light red color -- Quite obvious as a part of the game.
-> It's quite obvious if you getting small losses as loss is a part of the trade game.
-> There is nothing to be stressed about or to ponder upon these small losses if it comes along with profits as there is no such trading system or trader which only gives or generates profit.
-> This usually happens when stop-loss is hit and you must be thankful to yourself that you had placed a stop and accept the small loss.
Markets reward traders who admit their errors and change their ways whereas punish traders who are obstinate and won't change.
I think everyone must check the reason for each loss they incur if it's due to the system you are following and the system is profitable in long run then the loss is fine but if it's due to your own mistake, learn from it and rectify the same as quick as possible.
-->Reasons to get dark red color -- Hazardous and may lead to termination.
-> One must avoid these big losses at all costs; otherwise, you may find yourself in a situation where you are unable to pay any costs.
-> Most hazardous and may sometimes lead to the termination of your trading journey.
-> This usually happens due to the stubborn nature of traders where they don't accept that they are wrong or don't have the guts to book their stop losses.
I think why many of us incur big losses because of neglecting the use of system stop-loss. Traders have realized the significance of stop-loss hence they decide on the sl before entering into the trade but what they do is keep sl in mind rather than the system and when the price reaches the sl level they don't have the guts to book the loss due to which small loss turn into a big loss.
This is the reason why everybody should place system stop-loss as a computer doesn't have emotion.
As stated earlier Markets reward traders who admit their errors and change their ways whereas punish traders who are obstinate and won't change. That means that if the trader does not recognize their mistake and book, the sl market will penalize them with a large loss.
I suppose that all of you have got great knowledge of the 'Shades' of 'Trades' and an insight into all outcomes of a trade.
And I think that I was able to explain to you how the market also likes to play with color and now the first line doesn't seem to be fascinating but obvious.
I hope this 'Holi' market colors you all with dark green, and wish you all a 'Happy Holi'.
