Can stock trading help you reach financial independence? (Part 2)
When we decide to seek financial independence through stock trading, there are some very strict dos and don’ts which should be strictly adhered to at all times. Remember, the stock market may not have emotions whereas humans do.
To sustain in the stock market and to have a long term trading career, it is important to cultivate a mindset and stay calm. It should be kept in mind that trading is always a high return high-risk game and needs approach with a lot of discipline.
Invariably, every trader goes through a losing streak. Every successful trader while treading on their path of success goes through some kind of adversity. All successful traders have faced and overcome these obstacles.
How to start trading is the first important thing for long term success. There’s an African proverb that says “only a fool tests the depth of the water with both feet.” Many people feel so confident of beating the market that they enter the market without any kind of guidance or plan. That is why it becomes important that we start gradually or even better to start with paper trading.
Trading is all about probability and randomness. It has been seen quite often that traders while losing, try to average. Many times, even experienced traders initiate buying when the stock becomes weak and vice versa. They tend to forget the saying “Never catch a falling knife”
The second most important thing is what to do when a trade starts to move against you. It is quite common to see People find infinite reasons to hold on. And vice versa, if a trade goes accordingly, taking profits too early. Plan where to take profits and where to take stop loss. Thus, your capital remains protected.
The third important thing is not to focus on only making lots of money. Keeping both greed and fear away is half the battle won. If you only focus on making money when trading the markets, it’s very likely you will lose it all. When greed takes over, traders make huge mistakes.
By avoiding these three key pitfalls, you not only save money but also become a better trader: one step closer to complete financial independence.
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