Be a Winner or a Loser, it's Your Choice!
by, 20th-August-2008 at 05:27 PM (1395 Views)
The stock market is impartial as to whether you are a success or a failure in your share trading. The only person who cares (Apart from your bank manager) should be you.
For it is only by the choices and decisions that you make in the future which will determine your success or demise in the share market.
We will be dealing with realities today and actual truths. No pulling punches or soft soap. Just harsh plain facts.
This article is about Choices or Decisions. Call them what you will, but they will determine your future trading habits, and the trading success you may or may not achieve.
For a start I wont guarantee that after reading this article you will become a "Roaring Success" in your share trading forays into the stock market.
But IF you make the RIGHT Choices and put into practice some of the Choices below, you will be more aware of the pitfalls and traps that await the unwary and untrained trader.
And therefore swing the probability of success factor in your favour and thereby minimise the risks also. Plus by learning by your mistakes you will increase your chances of success.
These Choices are in no particular order of importance. These I leave up to you to work out what suits you best for you are the one who will ultimately be making all of your trading decisions.
So the "Ball is in your courtĒ It is now up to you.
Do you want to be a Winner or a Loser? If the answer is a Winner read on. If not now then perhaps later on when the time is right. Thatís if there is a next time.
So saying that let's take a look at some of the Choices available that will assist you on that rocky road to becoming more successful in your trading.
The Winner always has a preset plan to work to. I won't go into details as there are other articles available in this site which covers this in greater depth. This part is essential, for without a plan you are doomed to failure.
The Loser doesn't bother or is uniformed or worse doesn't care.
The Winner has bought his stock ONLY after he had completed his research and not before. This research was his OWN for he relies on his OWN Judgment and not someone elses.
This has involved fundamental analysis as well as some technical analysis. Over time the Winner has learnt which methods suits him best and applies them accordingly.
He keeps a list of prospects (20 is a workable number.) which he updates on a regular basis. For he knows full well that on his list of potentials stocks rests his future profits.
The Loser listens to hot tips, gossip in chat rooms, Television, magazines and other media outlets. He relies on others for his research. Assuming of course they have done some. For he very rarely does any research himself. And as for any analysis well thatís just too hard, and he doesn't need it anyway, and there's no point to keeping a list is there?
The Winner bought his stock at the best price possible, knowing full well that it was only luck if he happened to pick the very bottom and the lowest price just as the stock started to trend upwards.
If the share price rises above what he originally wanted to pay he will buy less stock, thus keeping to his budget. Or else he will wait for a downturn in the share price or failing that he will return to his list of other prospects. But still keeping an eye on this stock in case of a future downturn or a change in circumstances.
The Loser will chase the share price for he must have that "stock at any price" and therefore quite often ends up paying more than he originally intended.
Then only to see the share price dip suddenly as profit takers move in. They can be left high and dry waiting for the stock to reach a higher price again.
This can be months later particularly if the trader doesn't want to take a loss. This of course ties up his funds for the duration he hangs onto this stock.
The Winner knows that losses are guaranteed at times, and accepts this fact of life. But prepares himself for them in advance by using a "Stop Loss."
These are also known as conditional orders. The trader sees them as a form of insurance not only used to minimize losses but he also employs them to lock in his hard won profits as the share price rises.
He is fully aware of the other risks that abound when trading and takes steps accordingly. For he has learnt by bitter experience that if risks are not minimised that he can lose a goodly portion if not all of his trading capital.
The Loser again doesn't bother, or is uniformed or worse doesn't care. He sees it as an unnecessary expense. And as for risk he is unprepared for disaster.
He is in reality an accident waiting to happen. He will eventually lose his money and quite often is not even aware of as to what has caused this to happen.