Day traders have many difficulties
while making a consistent rising
equity curve in the market.
The problems with the market
are different for different traders.
But, there are perhaps some
actionable steps to make it better.
No, the problem is not with your strategy or not having the right tools or indicators to predict the market trend. Rather the problems are many-fold and perhaps on the opposite side of the spectrum.
For example, the market may not give a clear entry level. It may also confuse one with the trend signals or the volatility factors. And, there are other issues like greed and fear that muddle the mind even further.
What if one manages to get the right trades and the right amount of risk-to-reward ratio and still fails to make the equity curve strong and green?
It is sad to believe that even then there are new issues that might just crop up.
Lastly, even if one manages to get profitable, there is always this chance of making a very less profit as the viewpoint for the right percentage of profit is often not so clear to most traders. Due to the disparity in setting up proper targets and stop losses, a trader might either get out too early of the trade or end up taking a stop loss. Later to the dismay of the trader, the market may come back to the target levels. Such trades may occur due to improper timing. It can be eliminated by just analyzing the habits of a trader.
It is quite interesting that many traders resort to a flurry of indicators and live market tips in the beginning. But eventually, they give up on all this and stay only with simple price action theories. It is fun to note that price action, despite its simplicity has been made so complicated by the fake gurus of the market. A beginner often dreads understanding the market through a rational lens. Many start with their guts and irrational beliefs about the market. They eventually end up with a hole in their pocket.
It is painful to see that many falter and fall below the optimum level of confidence. There is this overwhelming feeling of always losing out, and missing out on important parts of the day. The fear of missing out on a profitable trade leads to wider losses and difficult patches in the market.
There is no big mentor or perhaps no absolute solution to this ailment, except for the building of strong psychology through learning and strict money management. A good habit takes time to build, while a bad habit has a lesser amount of barriers and is easier to practice more often than not. Barriers help in getting rid of bad habits sooner.
With learning comes the confidence to build upon many non-market-related elements. For example, one's sentiment can be hard-wired by the good beliefs in the system they trade. This in turn creates the right temperament and psychology for the market.
Many have not been able to step into the market with this fear of losing money and becoming bankrupt. Perhaps one would do justice to himself if he would give the time and effort to make up the mind and the psyche for the trades.
The trading journal is a very important aspect of the day trading world. In fact, for any kind of good business, you would want to have a record of the inflows and the outflows in your account.
It is ironic that it would entail more like not wanting to part with money and hoping only for success. And, it is perhaps not the right way to treat the market. Trading is a business, and there are upcycles and downcycles in it too. The best way to deal with the learning and the subsequent journey would be to record every single move you make in the market. A trading journal does that on a surface level. It would help record all details regarding every trade in the day.
If somebody is not on a low or zero brokerage account, it should be made sure that all the values are calculated correctly. Higher fees and costs of taking a trade will also vary one's equity curve.
Here are a few ways how one can benefit from a trading journal:
Simple errors in the market can be improved upon and eliminated by following a trading journal.
Bad habits like not taking "Stop losses" can be improved upon. If a trade has gone against the analysis or the market one should see ways of exiting the trade with losses. Instead of making a judgment of character and weak psychology, one can jot down daily behavior in the market. It might get the right set of knowledge on what to expect and how to exit an order.
The moment one enters a wrong trade, it should be noted in the journal. The basis of the analysis, realization and other factors can be logged. A journal can probably share two bits of what the market taught the trader the previous day. The same can be looked back at the following day. There could be an effort to study a range of days. It could help judge the character and nature of the trades.
A trading journal helps in understanding why your trades went right
As humans, we do not want to take or attract too much criticism in any way. If a trade has incurred significant losses, we would certainly not want to look back at that. Forgetting to log a trade that was in losses is pretty common and purposefully done by most traders. However, forgetting to log a trade that went profitable is equally damaging. One should be very quick in improving both the positive and the negative aspects of their trades. The trades that went better or resulted in making the portfolio green could just be because of sheer luck. It could be because of any external factors and not just the analysis. As a trader who can judge the market firsthand, it is important to note that, one should always use profitable trades to build confidence for future trades.
Books like this might help you in this process.
For Habit Creation and stacking
With good habits, comes the ability to judge the market better.
In fact, before anything, one should give the chance to technical analysis, and understand, how much can be done if the systems and the rules are followed effectively. There is more than one way of seeing the trades that you log. It could be just a book to show your trades to the world. Many prefer to show their profits out in the world, and many use this interesting exercise, as a way of learning. It helps to see and judge the market for using it to one's benefit. More than the world, your profits and losses should matter to your financial health significantly. Consult your financial advisor and take decisions accordingly.
FREE method to rule the market
Thanks to the regulator in the financial market, many fraudsters have been booked and have been caught red-handed giving malicious advice in the name of generating quick profitable income for their clients. Instead of looking for such quick ways to get rich one should always see the way of making a consistent run in the market through effective communication with the market. A trading journal is perhaps the only free tool that can help one achieve this goal of financial independence. It could be done through a systematic understanding of the market parameters.
Understand your strategies better with a Trading Journal
Learning is key here and one should not give up the opportunity to excel with the slightest possibility of improving. A simple habit of maintaining a trading journal can take somebody a long way. All paper trades or actual trades can be read as literature to nourish and improve the skills for systematic trade.
Trading Journal makes you consistent
No amount of backtesting is equal to an actual live market. Understanding markets with open positions is very important. No matter how successful a strategy is, it needs to run online to build the nerves of a trader. Tracking the progress and alterations of a market strategy can help in building top-notch performance across any time horizon. Consistency is about building confidence, and knowledge through studies of the trader's actions.
One should check for the most important and the riskiest aspects of the strategy. See, the drawdown and analyze what went wrong, every day as a routine.
A Trading Journal can be your unfair advantage
Most veterans in the market agree that one should never try to outsmart any part of the market for an unfamiliar edge. Unfair advantages come to those who thrive in the long run and give enough time to understand the things that go through their accounts daily. Many wait for proper setups and deploy strategies at a stage that creates more options for generating profits and minimizing losses. Simple practices like having a journal keeping track of the entry price, stop losses, and reason for entry can sound intimidating. But, with these daily market lessons, one can really steer far ahead in the race to become profitable.
A journal has been key to executing trading legs or creating enough opportunities to thrive in the market for a longer time.
Remember not to burn out, use automation instead to glide through multiple things at the same time. Start free with such platforms and grow your business exponentially.
Sell your unused data, and get sign-up bonus too!
Set your goals and maintain proper money management with a Trading Journal
Money management and risk management are very crucial to surviving the onslaughts of the market. One should see what the position sizing rule is being followed. To create an edge, it is important to wait for pro[per setups. Understanding how to sit on your hands is kind of a game changer. A trading journal helps to keep you focused on the market.
Margin Trading, Deep OTM & ITM
Reaching goals can happen when one has the goals written on a piece of paper. It is important to note that one can either work to take simple actionable steps or give up. A chance of winning ois created by simple steps. It is better to go with smaller targets than to set goals that are never to be fulfilled. You can, for example, do so much to create the right marketing ideas and business proposition, however, one should never forget that the market is the ultimate teacher after all. So how will one want to take that advantage is the question here. You can do so much with so less, yet be consistent and then let it compound over time.
See what patterns suit you best with a Trading Journal
As a trader, there are multiple strategies. There are also multiple ways of seeing the market. One can see it through the eyes of either the bulls or the bears. Market patterns help you see better in the market. Profitable patterns will scream at you to be taken every time. Confidence will follow suit. A journal should just not be about mathematics. There should be a clear depiction of the emotions that had an underplay in the trades. Since the market is played upon largely by humans, it is bound to reflect in the various patterns and chart structures. One should make a note of the eligible patterns that gave profits in the past. An attempt could be made to stick with the ones that had generated the most rewards. When effectively executed by the market participants any strategy could be fruitful. But, some studies on the actual execution might give you that extra shot of stability.
Stocks are a good way to make passive income but there are safer options for passive income too.
Control your trading emotions with a Trading Journal
The moment everything is so systematic, there is logic and strict measurement of the amount of money that can be lost in a trade. Things become much simpler for the body and mind to understand. Trade decisions become better, and emotions are penned down. Descriptive logs of the trades help you in surprisingly productive ways.
DISCLAIMER: The content should not be taken as a piece of investment advice. Investments are subjected to market risks, consult your financial advisor and do your due diligence. Content is for general reading only.
Read more market-related topics here
What will gold do during a recession?
Searching for Best Demat Account
Price action is key to successful trading
Learn more about the margin trading facility and the leverage trading options.
0 Comments