Hope is like the horizon. If you move towards it, it moves away from you; if you move away from it, it follows you! Stock market is the conglomeration of hopes. As many investors, as many trades, so many hopes! Notwithstanding all the analyses, charts and calculations and brainstorming, the overriding consideration for most of the trades is the investor’s hope! But hope does not have recognition as a trading strategy.
Every trade has a risk, at all times. When the going is good, the risk element is latent. When the going is bad, risk engulfs an investor from all the ends. Ask any investor, whether hope has provided him with tangible profits in stock trade. The answer in all probability is an emphatic ‘No!’ Rare miracles have happened in trades. These are exceptions, not the rule. There are substantial numbers of miracle-mongers in the stock exchange, who try to convince you of such possibilities, intentionally with a hidden agenda of profiteering.
If hope is accepted as the trading strategy, what difference is there in a lottery and gambling and stock trades? Just because an ordinary investor doesn’t understand the functioning, trends and moods of the market (even the experts fail to understand it), one can take protection under the wings of hope. Market has a method of functioning; only the investors fail to understand it. If investors were to gauge the movements in the market correctly, each one of them would have been millionaires. Now, that is impossibility. Someone has to lose for the other to gain. That is trade.
Market doesn’t offer concessions to an investor who visits it with hope. It is an emotionless robot that works to its own plan. It doesn’t care or spare anyone, who violates the basic rules of trading. One who takes the trading precautions is the winner, not the individual with fond hopes. Give up the hope about hopes in trades and work on proper trends. Build a sound portfolio, nurse and watch it well. See that each share is fully protected with appropriate stop loss levels. Invest within your buying power. Always think, what can go wrong with the market. Do not consider this as the approach of the negative personality. On the slippery road of investments, each step must be carefully measured.
If you are on the wrong side, do not stay wrong for a long time, waiting for the trend to reverse. Take steps to bail out immediately. Knowing when not to trade is more important than knowing when to trade. When the market throws tantrums, the best systems can break down; majority of the strategies will fail. Do you have some ideas to survive at those critical junctures? This is the real test about the investor, whose sixth sense remains alert on every trading day and every trade of the day.
Preserving the capital during the stressful times (like the recent recession in the market) is the supreme goal, than making profits. In the edifice of stock trading, do not use a single brick of hope! Trade on its merit—never to make up for the losses. Be practical and business-like.