Why is it that some people are successful in trading the markets? And why is it few people fail? Is it luck that determines if you are successful or not in making money from the market? Is it the system or strategy that a person use which determines the success? Is the emotional outburst of greed or fear or sudden reaction that does the trick?
A lot would say that it is the system or strategy that they employ which ultimately determines if they come out winning from the market.
Every system that exists for the stock trading options will show us how to make money using it. Without a doubt, it will make money for us. The question is usually how much money will the system make for us.
Blaming the system is easy but introspection is hard. Human emotions are always the key to either success or failure in any business. And it is no difference when trading the markets. Lot of things are needed after we open a trading account. We can read a lot about trading that we want, buy all the successful system that we want. If we can’t control our emotions, we can’t succeed in the markets.
In the market, there are but only two main emotions that every trader will experience; GREED and FEAR. When the emotion appears it is not how we eliminate it but rather how we act on it. There are natural emotions that cannot be eliminated. These emotions force us to react, thus how we respond to them will determine the outcome.
All too often when we begin to see two to three consecutive losses on our trading activities, we would begin to have doubt. When this happens we are already at the state of fear, we fear losing more of our money and thus begin to doubt that the system is working.
While no system is absolute, meaning no system guarantees that we make money all the time. The system seller would say that we would be able to make money consistently, provided we follow their system to the dot. No brokerage company help us if we are not willing to help ourselves.
On the other hand, when we begin to see two or three consecutive profits, we begin to search for upcoming IPO and feel on top of the world. We begin to feel that we can start making good money from the market and then start tweaking the system or maybe putting more money in the market to leverage our earnings or maybe begin to take on more positions, which ultimately make us deviate from the system which we were using. This is when greed has already stepped in to rule our thoughts.
There is saying ‘The system is only as good as the person using it’. So if we don’t follow the system either with we are making loses or when we are creating profits, we would ultimately fail. And to follow the system requires discipline. Like all spheres of life, discipline plays important surviving trait in stock market too. The discipline to act on our fear and greed when it sets in, will determine how well we do in the market.
Once again controlling mind is the key. We must have the discipline to say ‘I have reached my target. I should take profits now even though it may go higher’ when greed sets in. And when fear sets in one should say ‘I have to take a position even though the market does not seem to be moving in my favor’
While these are but two circumstances when greed and fears arises, there are, and will be many instances when we need to make a decision to either enter or exit the market. And these are very two most important decisions to take in order to succeed in the markets. The discipline to follow the system diligently no matter what happens to the market.
So no matter how good the system is, the surest way to lasting success in the market depend on the mindfulness of discipline to overcome our personal emotions, to follow a particular system efficiently.
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