What Makes Stock/Share Trading Inferior to Futures & options Trading...?
The considerable differences between both segments
In stock/Share trading the ROI (Return on Investment) is very much lower for shorter duration (in any trading strategy) but it is good for Long Term Investments. why we say this,
consider this ,To trade in Stocks/Shares you have to pay entire amount as margin to get delivery into your portfolio and incase of day trading you get only 5 times your amount with square off restrictions (which most often work against the trader).
Also the price of Individual shares are Influenced by psychology of traders ,Market conditions,Economy factors and finally Company profile.Therefore, too many analysis have to be done before setting a trade plan where the pay off is also low but when we compare this to Futures Trading (Commodity or Forex) we have to analyse only Market conditions Through Psychology of traders which is easier than the former one.
Any Immediate important News will have a magnified impact upon the stock price which gets a trader towards uncertainity (no one ever knows what news is about to come in future).
In futures trading you get to pay only 3 to 4% of the entire amount as Margin which opens way for Higher ROI in short term but we have to remember that the risk is higher than share Trading.
This gets us to another question ,whether one is a trader or an investor, Trader is one who makes rapid deals in scalping or swing strategy to make money in short term but an investor often views in long term returns in which he invests in a share/Stock and waits patiently for its price to rise (not less than 6 months). one should always have clarity in what way he/she approaches any financial market.
What it takes to be a Better or Best Trader.....?
Trading or investments, as most of the people know them and have an illusion that it is Gambling and no body can Make consistent profits in either of that. To adress this issue,trading or Investment is pure Business Strategy and has no gambling in its very own nature (may be a trader gambles or speculates and that does not mean Market itself is a place for gambling). Ok, now we must understand market's potential.
"Market is a device which transfers Money from Impatient to the Patient".
Yes, it is obvious What warren buffet said. Most of the traders want money and they expect somebody to provide tips for them and they wanted to trade on to make profit. Don't you ever think it is out of logic: for you to score good marks When somebody is writing the examination for you (Trading is an Individual process so should be the Analysis, for being successful). For making Money consistently you should not be Dependent on anybody, follow your very own Strategy to stand out of the crowd and this is what it takes for anybody to be a successful trader, let us address the key-things that a trader should and should not Do in his entire lifetime to be a successful one.
Proverbs & Quotes relating to novice and succesful trader's mindset & traits
zen things to remember & follow in life.
Think about what is necessary.
Do one thing at a time.
Do it deliberately.
Do it completely.
Do not go by the way of instinct, sometimes it favours and most of the times it backstabs you.
Do not use any indicators or oscillators, expert advisors or Robots because they are lagging in nature.
Do not take trades on anybody's advice (you don't know what they are telling you to do, may be and may not be it is correct, the probability comes to play here, which is not good for any trader).
Do not overtrade on any circumstances (leverage acts for you and against you as well, have a deep concern about your Margin)
Do not Listen to any professional's Advice or any Telivision Channels regarding making Decisons for trading (because the advice given by them are only opinions and markets do not follow anybody's opinion and will DO what it has to DO.)
Not only Data releases determine Markets movement (Above all psychology of market paticipants control and influence markets, try to learn about forecasting Future psychological Swings).
Don't let your emotions play their part either Fear or Greed (when your trading is methodical they won't).
Do not use very tight stop losses (your method should be adoptable for this condition).
Do not have an intuition about controlling market because market is very much bigger than any individual or a group of geniuses or even greater than any financial Institution. Better ride with the waves, Know and follow the trend.
Always have an objective or reason to take a trade.
Make a check list to place a trade.
Do have a Method that works for you (it can be Elliott wave principle or some of your own).
choose a correct volume to trade.
Always Analyse History of markets to gain perspective and make further decisions because markets tend to repeat themselves more often than not.
use only technical analysis to trade on Forex, Commodity, all other markets except individual stocks.(because the company's profile also influence the price of that stock like Balance sheet analysis is good on that aspect).
Do Trading in a professional Manner and say no for Gambling or speculation.
Always be happy to take few losses (they confirm that you are making mistakes and better start learning from them and make sure that the same one is not repeated again).
Money management is as much as important for any trader as his method (always be Particular about Risk Reward ratio's).
Do track your portfolio; always be in touch with Markets as much as you can.
Always be loss-averse, you should not be too concerned about making profits on each and every trade that you place but you are supposed to keep an eye on losses, it makes more sense when you protect your capital your account automatically leans towards profit...
Finally Knowledge, Practice and Experience are the only key to success (There are no other short cuts).
Guidelines from Trading Veterans to succeed in any financial market
" Gaining knowledge is a journey and not a destination ".
" To make Great decisions one should be experienced with desperate and wrong decisions ".
" Rate of Excellence is directly proportional to Rate of success and at last excellence is what that matters for all ".
" A smart trader is a person with 1% inspiration and 99% perspiration (hard work) ".
" Past is necessary,future is important,but be greatly aware of present ".
" Dream the impossible, nothing is impossible ".
" People fail in life and markets because they are concerned on solving a problem temporarily and not on a long term/permanent basis ".
" It does not matter how slowly you go as long as you do not stop ".
" Be like a postage stamp,stick to one thing until you get there ".
" Relentless practice is required for being a better trader ".
" Becoming a successful trader is not a matter of age but it is of experience and knowledge.".
" Everybody See, but their vision about World is different so does everybody trade but the results are different ".
" Success is not owned but rented and the rent is hardwork ".
" There is reason behind everything happening in life and this is not limited to life but also applicable to markets...know the reason behind every move".
" There is no such thing called Failure, it is all about Experiences (learning) ".
" Market is a world for survival of fittest where only experienced & knowledgeable people are in the game consistently and all others are washed out by markets one or the other day ".
" Trading is an art, trading is science, trading is Business and is not related to gambling by any means ".
"The greatest Enemy of Knowledge is not Ignorance but it is the illusion of knowledge ".
" The cup (success), a trader without knowledge wishes to fill has no bottom ".
" Ignorance is a devil to any success story, make a leap forward without slack, this ain't the time for being cool ".
" It is never too late to start a new beginning if you find yourself in the wrong direction ".
" As we know there isn't any substitute for hardwork, till now ".
" Learning from mistakes is inevitably a great practice to be a better trader ".
" It is not good for anybody to be half ready in a battlefield (market) make yourself best equipped with all the knowledge and experience you needed ".
" Today is better than two tomorrows ".
" The best Education not only imparts knowledge but it also stimulates the ability of a person to think ".
" Being practical makes a trader successful ".
" Imagination is more important than knowledge ".
" Making a mistake and finding where that it has gone wrong is really very instructive ".
" Do whatever you like to do but do it after fully understanding all the concepts,cons and pros -->do not start a work without knowing how to finish it ".
" The wisest mind always have something yet to learn ".
" To gain knowledge one should learn and to gain wisdom one must observe ".
" Prevention is beter than cure, Learning is better than losing ".
" Be idealistic follow none except your analysis & passion ".