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30 Aug

Profitable stock trading: A psychological game

  • For a day trader, it is essential to keep a balance between Greed and Fear. But, most of the traders unable to make a balance between Greed and Fear.
  • As Profitable Day Trading is a purely Strategic and psychological game. After setting a strategy the day trader have to practice the same.
  • For, most of the Traders, controlling the emotions is a very difficult during Day trading.
  • Let’s take an example to understand, how Trader unable to control emotions while doing day trading.
  • Say, Mr. Shah buys a scrip A for Rs.190/- with a target price of Rs.196/- and a stop loss at Rs.187/-

SITUATION 1

Mr. Shah started panicking and make a Sale at 192.95, just because of Fear of losing the Gain that he has made and not waited to reach a level nearby Target Price that is Rs.196/- , So, Mr. Shah only made a profit of Rs.2.95 per share instead of Full profit of Rs.6 per share (Means Loss of Rs.3 per share, just because of Fear)

  • Assume scrip A reaches to a level of Rs.193/- …
  • And then reaches a level of Rs.192.25
  • And then reaches a level of Rs.193.40
  • And then reaches a level of Rs.192.75
SITUATION 1
SITUATION 2

SITUATION 2

Mr. Shah is in Greed that it will again reaches at it’s original buy price and finally make a Sale at 184.50, just because of Greed of Saving the loss that he has made
and not sell the Scrip at it’s stop loss price of Rs.187/- Mr. Shah made a further loss of Rs.2.50 per share and total loss of Rs.5.50 per share.

So, in intraday call for Successful profitable Stock trading controlling emotions is essential, and it cannot be achieved on day one of Stock Trading. It is practiced and can be developed gradually.

  • Assume scrip A reaches to a level of Rs.187/- …(Means achieved a Stop Loss Target)
  • And then reaches a level of Rs.187.90
  • And then reaches a level of Rs.186.70
  • And then reaches a level of Rs.185.25

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