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Learning from trader's mistakes: Turning 37L loss to 1L balance📈 The stock market can be a thrilling but challenging place, especially for new traders. Recently, I had a conversation with a fellow trader who went through a rough patch and sought help to recover from his losses. Let's delve into his experience and extract essential lessons for aspiring traders to navigate the stock market wisely. 📜 The Trader's Story: On 26 July, I received a message from a trader who felt really down because he lost a lot of money in the stock market. He had started with a good amount, but unfortunately, he ended up losing a massive 37 lakh Indian rupees, leaving him with just 1 lakh rupees now. He was feeling desperate to find a quick solution to recover his losses and offered to pay me for my trading advice. 🚫 Seeking Quick Solutions: In his desperation, the trader was searching for quick solutions to recover his losses. He hoped that by following my trading calls, he could turn things around and make up for the losses he suffered. However, I knew that seeking quick fixes rarely works in the stock market. It's essential to understand that success takes time, and there are no shortcuts to making a quick fortune. 💭 Setting Realistic Goals: One of the major problems the trader is facing is setting unrealistic goals. He wanted to turn his 1 lakh rupees into 37 lakh rupees rapidly, which is a very impractical approach. In the stock market, it's crucial to set achievable goals and have patience. Building wealth takes time and consistent effort, not overnight miracles. 🚫 Avoid Blindly Following Others: A significant mistake the trader made was blindly following others' advice without fully understanding the reasons behind it. He didn't do his own research and simply followed what others suggested. This can be dangerous because not all advice is reliable or suitable for your specific situation. It's crucial to learn about the market and make informed decisions based on your knowledge. He is repeating this mistake again by asking me to give trading calls 🚫 Chasing Tips and Rumours: The trader's reliance on trading calls from random sources like telegram groups exposed him to unreliable advice and rumours. It's essential to avoid chasing hot tips or acting on rumours without verification. Successful trading is based on well-researched decisions and a deep understanding of the assets you're investing in. 💼 Stay in Control of Your Account: Handing over control of his trading account was another big mistake the trader made. When you let someone else trade on your behalf, you lose control over your money and decisions. It's essential to stay in charge of your account and take full responsibility for your trades. 🚫 Trading Without a Plan: Another significant mistake was trading without a well-defined plan. The trader didn't have clear entry and exit strategies, which led to impulsive decisions. Having a trading plan that outlines your goals, risk tolerance, and trading strategies is crucial for maintaining consistency and discipline in your trading approach. 🚫 Trading with Emotions: The trader's emotional trading behaviour was a major stumbling block. Emotions like fear, greed, and impatience can cloud judgment and lead to irrational decisions. Keeping emotions in check and following your trading plan objectively is key to making informed choices. Overtrading: 🔄 The trader's eagerness to recover losses quickly made him overtrade and take unnecessary risks. Overtrading can lead to increased transaction costs and potential losses due to impulsive decision-making. Patience is vital in trading, waiting for the right opportunities instead of rushing into trades. 🎓 Lack of Education and Continuous Learning: The trader's lack of proper education and continuous learning was evident in his approach. Successful traders never stop learning and improving their skills. Keeping yourself updated on market trends, economic developments, and trading strategies is essential to adapt to dynamic market conditions. 📚 Learning and Practice are Key: The trader lacked proper knowledge and practice. I stressed the importance of learning about the stock market and practicing with small amounts before risking significant money. Trading is a skill that requires practice to improve. 📉 Ignoring Market Trends and Analysis: The trader failed to pay attention to market trends and analysis. Successful trading involves studying charts, technical indicators, and fundamental factors that impact the market. Ignoring these critical aspects can result in making uninformed decisions and being ill-prepared for market shifts. 🏁 Final Conclusion: The trader's journey through significant losses in the stock market provides us with valuable lessons to improve our trading approach. Avoiding quick fixes, setting realistic goals, conducting thorough research, and staying in control of your account are vital for success. Implementing risk management strategies, trading with discipline, and avoiding emotional decisions are essential for consistent profitability. Remember, trading is a journey of continuous learning, and embracing a growth mindset will help you become a successful trader in the long run. Happy trading and may your journey be filled with profitable experiences. Remember, the stock market is a journey, and it's okay to make mistakes as long as you learn from them and keep improving. 👍 If you find this learning article helpful, please like and comment with your observations. Your support keeps me motivated to write consistently. Follow me on TradingView for more articles and trade setups: in.tradingview.com 🚀 Keep improving, stay disciplined
NSE:NIFTYEducation
by AfnanTAjuddin
The most common mistakes traders make and how to avoid themWhen it comes to investing, trading can be a highly lucrative and exciting way to potentially earn profits. However, it's not without its challenges. One of the biggest challenges for traders is avoiding common mistakes that can lead to significant financial losses. In this article, we'll discuss the most common mistakes traders make and provide actionable tips on how to avoid them. 1. Lack of Research and Preparation: One of the most crucial aspects of successful trading is research and preparation. Unfortunately, many traders overlook this crucial step in their haste to start trading. Without proper research and preparation, traders may miss critical market trends or overlook important factors that can impact their trades. To avoid this mistake, it's essential to do thorough research and preparation before placing any trades. This includes conducting fundamental and technical analysis of the market, evaluating economic data, and developing a trading strategy based on your research. By doing so, traders can better understand market conditions and make informed decisions about their trades. 2. Emotions and Impulsivity: Another common mistake traders make is allowing their emotions to impact their trading decisions. When traders become emotionally attached to their trades, they may make impulsive decisions based on fear, greed, or other emotions. These decisions can lead to poor trading results, including significant financial losses. To avoid the pitfalls of emotions and impulsivity in trading, it's essential to remain objective and rational when making trading decisions. Traders should stick to their trading plan and avoid deviating from it based on emotions. Additionally, traders can use tools like stop-loss orders to automatically close positions if the market moves against them. 3. Overtrading: Overtrading is a common mistake that many traders make, and it can have devastating consequences. Overtrading occurs when traders place too many trades in a short period, usually due to a desire to make up for previous losses or to chase profits. This can lead to significant financial losses and may result in traders ignoring their trading strategy. To avoid overtrading, traders must be disciplined and patient in their trading approach. They should stick to their trading plan and avoid making impulsive trades based on emotions. Additionally, traders should set realistic trading goals and avoid chasing unrealistic profits. 4. Lack of Risk Management: Risk management is a critical component of successful trading, yet many traders overlook this aspect. Traders who do not implement an effective risk management strategy are more likely to experience significant losses in the event of adverse market movements. To avoid the pitfalls of poor risk management, traders should assess their risk tolerance and develop a risk management strategy that aligns with their risk tolerance. This may include implementing stop-loss orders, using position sizing techniques, and diversifying their portfolio. 5. Focusing on Short-Term Profits: Traders who focus solely on short-term profits often make the mistake of ignoring long-term market trends and opportunities. This can lead to missed opportunities for profitable trades and may result in traders making impulsive decisions based on short-term market movements. To avoid this mistake, traders should adopt a long-term perspective in their trading approach. They should focus on market trends and opportunities that align with their long-term trading goals and avoid being swayed by short-term market movements. 6. Not Having a Trading Plan: Traders who do not have a trading plan are more likely to make impulsive trading decisions and may overlook critical market trends and opportunities. A trading plan outlines a trader's approach to the market and includes details on their trading strategy, risk management, and trading goals. To avoid this mistake, traders should develop a comprehensive trading plan that aligns with their trading goals and risk tolerance. They should review and update their trading plan regularly to reflect changes in the market or their trading objectives. Conclusion: In conclusion, avoiding common trading mistakes is essential to successful trading. By doing proper research and preparation, managing emotions and impulsivity, implementing an effective risk management strategy, focusing on long-term profits, and developing a comprehensive trading plan, traders can make informed decisions that lead to profitable trades. Trading is a complex and challenging endeavor, but with discipline, patience, and a commitment to continuous learning and improvement, traders can achieve success in the markets.
NSE:NIFTYEducation
by AfnanTAjuddin
My reasons and Your reasons behind losses while trading.Why do people take losses in trading? The reasons or mistakes behind a trader make losses. I suggest you these reasons should not be repeated. If you might have also come to cross from this reason and got losses, you can type in comment number of specific reason what you have faced. In case, you also have another reason except in this post, please or kindly specify it in comment section . We will discuss it for a solution. 1). Stop following the right/perfect "trade-setup strategy" even if you are earning from it. For instance, you're going good in "breakout setup" but not following consistently, change suddenly/started to follow another pattern the setup. 2). Not enough Technical Knowledge. New traders just learn from YouTube or another resource about basic charting reading & indicators, such as MACD, chart pattern, trendline, etc. directly jump in practical trading with using full margin and later convert to loss. They believe trading is very easy but it's theoretically. In the practical, you need experience & practice a lot to earn. 3). Believing blindly on Other's Tips. A lot of traders pay high prices for tips/research/analysis and follow them blindly without applying margin management rules. As a result, they wipe out. I am not saying to ignore/avoid other research or analysis but you should apply margin management rules and also do paper trading on their research. 4). Try to cover loss, Expecting huge profit. When traders take a loss, they think to recover the loss by taking entry huge quantities to recover from little pips/points and fall into a huge loss. After taking a position with the perfect trade-setup, some traders expect more profit than the per-defined target. Later, they convert into loss because of changing setup. 5). You take risks that you can't afford to lose. Taking Unlimited Risk means, neither protective stop nor mental stop. Some people keep a 1:1 stop-loss and target ratio. Don't do this: "Holding losers trades while selling winners trades". 6). Lack of Emotion Control. Not following your own per-defined setup, for example, changing stop-loss or not exiting and expecting to recover, sometimes not booking profit and expecting more profit and finally convert into a loss. In more clear words, change your set-up frequently while real-time trading. Don't believe in Exit or Marry with Beliefs/Hopes(Hope is not a strategy). Believe in recover loss without any specific reasons and finally had to take a huge loss. I have seen in many new traders, they let Loose Grow and take a small profit. Avoid the words ‘hope”, “wish” or ‘feel’ when talking about a trade-setup. Believing that price cannot move higher/lower.
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NSE:BAJAJFINSVEducation
by Trade-Technique
121
Phillips Carbon - Positional - a mistake I corrected Sharing a mistake I made and how I corrected it. On Weekly chart, I saw a nice rounding botton pattern and stock close to ATH with a BO candle of 26 July 2021. I also saw volume expansion on that day as well as expansion since the candle of 18 January 2021. I went long at approx. 270. Although RSI was above 60, what I failed to see was RSI High was flat. And price was making a high with flat RSI. That was my first mistake. The second mistake was my decision was based on upward slope of MA line and entry price was roughly 25% away from 30 Weekly MA. The third mistake I made was I have a rule where I add 20-25% corpus on BO with Volumes and slowly add the rest on retracement based on price action. In this case, I added 75% at one go. I also didn't see the Daily chart for entry. A lower timeframe is recommended as ideal for entry, so for someone like me who invests positionally basis Weekly charts, I should have taken cognizance of the price action on Daily. We don't know what will happen in future. Nifty 50 is on steroids and maybe price will go up or it may retrace and form a cup and handle pattern which is a better confirmation in terms of probability. At my entry price my risk was way too high to add 75% at one go (If I had added only 20-25% this would be a safe trade). And as investors and traders, we have to manage risk and protect capital. You may wonder why did I do this? It was my mind that was excited and momentarily I saw a prominent site where the stock had made the day's high. I make a conscious effort to not follow the calls given by research agencies or stock news sites. There is a reason behind this- news comes later, charts inform us earlier. I exited a part at cost and remain invested only 25% of my corpus for this stock. If stock retraces to the area of better Risk Reward zone, I will add more. Disl: This is not an investment or trading buy / sell advice. The purpose of this is educational- to share knowledge and learn from the community members. Please consult your investment advisor for any investment related advice.
PEducation
by culturalDealer79974
3