Tuesday, June 30, 2009

Small Profits are Better Than No Profits At All

Once you have learned to know the traps and pitfalls of trading in the stock market, (Usually by bitter experience) you can then more readily avoid them.

Making small mistakes are par for the course when you first begin to trade. It is quite easy to enter the incorrect stock symbol or wrongly set a buy level price too high.But these are excusable.

The traders main concern is to avoid making the mistakes that are due to bad judgment rather than just basic errors. These are the “lethal” mistakes which can ruin a traders trading career.To make sure that these pitfalls don't occur, you will have to watch yourself very closely and stay alert.

Greed is a visible but serious mistake which most traders make some time or other in their trading career. No one is immune.

Actually most traders are naturally greedy, since the main reason that they are trading in the first instance is in order to make more money. Wanting to make more money is Quite natural, but wanting it too quickly can be dangerous. When a trader first begins to start trading, they want to get rich,but they want to do it all in one trade. And that’s when they lose and come unstuck.

All a traders trading success comes from trading consistently. Unfortunately there are many newbie traders out there who sincerely believe that their fortune will be made in just one awesome trade, This is just a pipe dream and a dangerous one at that..

Experienced traders soon realise that the best, and usually the only, way to make a fortune in trading is by sheer consistency and nothing else. Their fortune will in all probability be made in small amounts. Unfortunately most traders will go for the big gains, which will inevitably result in big losses which is very detrimental to their trading capital..

It is a natural instinct that traders are more interested in greater profits per trade. For instance what would you rather have – a twenty dollar bill or a five dollar bill? The answer is really very obvious. But when it comes to trading, it’s not really that simple.

If you don’t take the five dollar bill, you may lose twenty dollars of your own money, or possibly more. The main thing to remember is this. Even though you can’t take the Twenty dollar bill immediately, you can take four five dollar bills over a longer period of time. And the end result is exactly the same – twenty dollars.

The point that I am trying to make here is that small steady profits add up. I am not saying you’ll never have a big winning trade. In Options trading for example, it’s quite a common occurrence to make profits of 100 in just one trade. So, it’s not entirely impossible to get the big profits.

It is just being unrealistic to expect big profits all the time and its not something you should count on all the time. For if you continually expect profits like this all the time and will not accept nothing less, all you’re doing is setting yourself up for guaranteed disappointment.

The guaranteed key to profitable trading success is by making small but consistent profits. Consistency is the key, because if your profits are consistent and predictable,therefore, you will learn with experience when to exit exactly with a profit.

And one last tip resist that temptation to stay in “just that little longer, for just a little more.”be content with small profits.

No comments:

Post a Comment