More often than not, how you perceive a trade depends on the outcome of your last two to three trades.
Therefore, it is on the basis of the success and failure of these trades that you determine the risk involved in the present trade.
However, master traders do not let their previous trades determine the outcome of their present trade and this is what sets them apart.
Much of what we think and believe is a result of our social values and the manner in which our minds work.
Successful trading is all about being in the ‘now moment’ and seeing the opportunity flow as it is in the moment.
The secret lies in understanding the major facts that govern the stock market as a powerful entity.
Through the course of this article, we would be looking at various factors pertaining to the Stock Market.
As understanding the stock market is a time-consuming, humungous process, which requires a great deal of patience to get through – we have divided our illustrative article into two major facts.
Fact #1 : Markets Are Uncertain
At the very core of how markets function and run, you need to understand, believe and learn that markets are uncertain.
Anything can happen at any time and there is little you can do about it.
Your success at trading largely depends on how well you digest and learn this fact.
When you believe that anything can happen, you are telling your mind that it should not associate this moment with any other moment only based on the similarities and dissimilarities.
This is the very beginning of a journey of living in the ‘now’.
Once you are able to accomplish this, you can pull all your strings and disconnect yourself from any expectations, limitations or predictions.
Moreover, it also disconnects you from any pain or discomfort that you would have associated with this experience.
When you have left your options open, your mind will be able to welcome all the host of opportunities and possibilities that exists in the trade.
In a way, what this does is that it makes you available for anything and everything.
The perpetual blindness that we spoke about in the previous chapter can be just as overpowering in the trading business.
Your fears can force you into a zone of perpetual blindness where you may not be able to see opportunities in a trade and only believe that the trade will end up with a certain outcome.
The belief that ‘I am wrong’ can keep you from using all the information that the market has provided you and end up with nothing in your hands.
A market is seen as trending by anyone, but for people who are working with fears in their hearts; this characteristic of the market will become invisible.
You will realize the opportunity and the trending nature of the market only after you are out of it.
Moreover, reason why these factors won’t are apparent to you is that you might not have learned to make distinctions.
When you make yourself available, you ensure that you don’t just see the visible, but you can also see the invisible.
Although, we have been promoting the ‘anything can happen’ perspective, it can also be a good idea to believe that ‘anything can happen, but I have an edge’.
In a way, you need to accept that the outcome of the trade cannot be predicted, but you also need to see the fact that with all that you have in your favor, the outcome can be on the positive side for you.
Making yourself available also brings you into a state where you will be curious to know the outcome.
Your mind knows that the outcome cannot be predicted and you are open to anything that comes along.
This is a very safe and happy state to be in as far as the long haul is concerned.
Adopting such a free state can help you in many ways.
First of all, it allows you to counter the internal resistance in you with ease and ensure that you see and perceive all the opportunities that the market is presenting to you.
In addition, it also ensures that you get an opportunity to learn something new about the market.
Trading in the market is also about connecting and communicating with the market.
You also need to pay heed to resolve the conflict between rationality and creativity.
Every time, you have some information with you, your mind will be divided into two sections.
One of these sections will analyze this information based on knowledge, learning and experience and find a logical answer for you.
Failures, disappointments and fear, at the fundamental level, are a result of the not accepting the psychological realities associated with trading.
In other words, the first step towards becoming a successful trader is to believe in the fact that the market is uncertain.
The biggest mistake that people make as far as trading is concerned is that they believe that trading is all about market analysis and pay no heed to the intricacies involved in being a trader.
With this said, we don’t mean to say that market analysis is of no use to you.
It sure is! It will make the task easier for you, but it cannot be a pioneering factor for your success.
Acting in a manner that we aren’t trained to behave in and becoming an individual who we aren’t really are will require some good amount of effort on your part.
You will need to make some adjustments and changes in the way you are and the manner in which you think.
Consider, for example, that you are travelling to an exotic place for a holiday.
What all do you think you will need to do at the personal level to prepare yourself for the stay?
You will need to know the basic language, customs and familiarize yourself with the environment there.
All of these things help you adapt to the settings of the new place.
In a similar manner, as a trader, you need to adjust to the market environment to achieve success.
Most traders ignore this fact conveniently for the reasons that trading does not require them to visit an office or travel to places and they don’t have any specific skills on the list that can be marked as essential to start trading.
Most of what you need to know as a trader is already a part of your system, but then knowing isn’t the same as accepting.
Acceptance requires you to deal with the conflicting thoughts in your mind and reason out why you need to inculcate a set of beliefs or opinions.
When you have truly accepted a fact, you have no conflicts in your mind.
In view of the fact that your behaviour shall stem from your beliefs, success and the ‘right trader attitude’ will come naturally to you.
So, it wouldn’t be wrong to say that the amount of acceptance you have for success will determine the magnitude of success you manage to achieve.
Dwelling into how deep this concept is shall make you understand why most traders find it so difficult to survive in the trading world.
Simply, they pay no heed to their mental framework and the conflicts that exist in their mind.
These conflicts and contradictions resist the principles of successful trading and most of what you know and have learned about trading will not be implemented in the manner that it should.
This makes it extremely important for you to resolve all conflicts and start trading with a clean mental slate.
Fact #2 – Infinite Combinations of Possibilities Exist In The Market
The fundamental and perhaps the only fixed characteristic of the market is that anything can happen in the market at any time.
If you have ever worked or observed the market, you will know that the changes in the market can be too erratic and unpredictable at times.
However, most traders forget this characteristic of the market and begin to take it for granted.
They start believing that they understand the market and know what the market has in store for them and this is what leads to errors and failures.
The price variations in the market are a result of trader behaviour majorly.
They bid higher for trades or offer them at a lower price to change the prices in the market.
Coming to why traders play around with the prices in the market, this can be understood only if you understand the very basic reason for people to trade.
Reasons, intents and purposes may differ, but in most cases, the trader will have one overpowering and compelling reason to perform what he or she is doing – earn profit.
We are all here for money and the only way, you can earn money in this market is by buying trades at a lower price and sell them off at a higher price.
Traders buy trades that they believe they can sell at a higher price in the future.
Moreover, they sell off trades at a price when they believe that the prices of the trade will fall in the future and this is the highest price that they can get for the trade concerned.
All in all, it would not be wrong to say that price variations are directly related to the trader’s future expectations.
If you take a look at the market dynamics, you will realize that in most markets, only three types of forces exist.
The first two forces are traders who believe that prices are lower than expected and those who believe that the prices are higher than expected.
The third and the most powerful force of the market constitute traders who aren’t sure about their stand in the market.
They are basically a bunch of people who are watching the market and waiting to take a call on which way they should go.
However, there may also be a situation where these forces stand balanced.
In such a case, the prices in the market will stagnate.
This brings us to an important question.
The fact that price movement only depends on the convictions of the traders makes it the sole reason for the price movement.
Therefore, there isn’t anything that can avoid a change if the trader conviction supports it.
This explains exactly why and how the market can go any which way.
Convictions or beliefs are not absolute.
They are subject to time with perceptions, understanding and the mental state in which the trader is presently.
So, the conviction of the trader can change at any time of the day and at time of the trade.
Moreover, it takes only a single trader to change the mechanics and dynamics of the imbalance.
So, with this kind of uncertainty prevalent in the market, fortunes can turn in any which way.
Read more at www.stockmarketsignals.com/reports/ to know more about the Stock Market.