1 Jun 2021, 15:55
George C. Marshall once said that the greatest gift a leader can have is the ability to decide.
This is coming from a man whose Marshall Plan helped rebuild Europe back after World War 2. Now, we find this very true, also for a trader as well. The ability to decide and take action even in the absence of complete information is what makes a good trader. No matter how smart you are, it’s impossible to have a 100% hit rate in your decisions. However, if you do not decide, then you would never press the “Buy” button that could potentially bring your next profit.
Many traders are plagued by the “analysis paralysis” syndrome. They are bogged down by too much data that they could not decide if the stock they are looking at is the right one to buy. Another category of traders, they fall victim to “whack-a-mole” syndrome. They do not know how to analyze a stock and just buy any stock that caught their fancy. Both types of traders cannot make money in the stock market consistently.
So, here’s the million-dollar question, how to you get to the stage where either a “yes” or a “no” is the answer? How can you enter any trade without any hesitation and not second guess whether you had made the right decision or not?
Why are most people not decisive in their trading?
That’s because they do not have the right trading strategies to begin with.
A trading strategy is basically a plan. At EmSociety, this plan involves identifying a chart pattern in the stock that occurs over and over again that reaps a positive result most of the time. Most people could not make money consistently in the stock market because they did not plan their trade well before they enter their trades.
So, what makes a good trading strategy?
One: It works most of the time. Remember that not every trade would make you 100% profit. But the good trading strategy identifies the right chart pattern that works consistently well in the past. As traders’ behaviour do not change drastically over time, these patterns consistently show up and have proven to make good profits in the past. Therefore, it is important that you back-test your strategy. This means researching on many stock charts and finding the chart patterns that work very well. At EmSociety, we only accept strategies with more than 70% winning rates. This allows us to make trading decisions knowing that we will win 70% of the time. By only using strategies that have high winning rates, we are able to decisively enter any stock based on the chart pattern without fearing of losing out a large part of our capital.
Two: It must have a good exit plan. Our trading strategy involves an exit plan which helps us determine how much we can lose. Remember, every trading strategy could go wrong anytime. But, if you could fix how much you can lose, won’t you be at least be more decisive and less stressed when you make your decision to enter your trade?
Therefore, you must learn the right trading strategies and then execute the right trading plan with decisiveness. The stock market is dynamic, there is no way we could know before we enter the trade whether it would work or not. However, we must take action, if not we would not see any result. If it is a bad result, it is a good opportunity to learn from it. But, when the time comes to pull the trigger and enter the trade, you must be decisive and not worry about its results. If you follow the right trading plan, chances are you would be right most of the time.
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